Social Security COLA 2025: What to Expect

Social Security recipients can expect a small bump in their benefits in 2025, but it won't be as large as this year's historic increase.

The annual cost-of-living adjustment (COLA) is designed to help Social Security beneficiaries keep pace with inflation. The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the change in the prices of goods and services purchased by urban wage earners and clerical workers.

For 2023, the COLA was a whopping 8.7%, the largest increase in four decades. However, the COLA for 2025 is expected to be much smaller.

According to the Social Security Administration, the COLA for 2025 is expected to be 3.8%. This estimate is based on the assumption that inflation will average 3.8% over the next 12 months.

While a 3.8% COLA would be a welcome increase, it's important to remember that it will not fully offset the rising cost of living.

In recent months, inflation has been running at a higher rate than the Federal Reserve's target of 2%. This means that Social Security beneficiaries are likely to see their purchasing power erode over time, even with the COLA.

If you're concerned about the rising cost of living, there are a few things you can do to prepare.

* Create a budget: This will help you track your income and expenses, and identify areas where you can cut back.
* Shop around for the best prices: Compare prices at different stores before you make a purchase.
* Take advantage of discounts and coupons: Many businesses offer discounts for seniors.
* Consider getting a part-time job: This can help you supplement your income and save for retirement.

It's also important to remember that there are many programs available to help low-income seniors.

* Supplemental Security Income (SSI): SSI is a federal program that provides monthly payments to low-income seniors and disabled adults.
* Medicare Savings Programs: These programs help low-income seniors pay for their Medicare premiums and deductibles.
* Extra Help with Medicare Prescription Drug Costs: This program helps low-income seniors pay for their prescription drug costs.

If you need help, don't be afraid to reach out. There are many resources available to help you navigate the challenges of retirement.