Inflation is currently impacting millions of Americans in their everyday lives, with elderly persons on social security being the most vulnerable. As a result, there are high hopes for 2025 cost-of-living adjustment (COLA). Although it would be a while before any official declaration could be made about it, some estimates and projections can help us understand what beneficiaries should expect.
Current COLA Estimates and Predictions
- The TSCL, a non-partisan group advocating for older people, predicts a 2.63% COLA for 2025.
- According to Mary Johnson, an independent policy analyst on Social Security and Medicare, there will be a slightly higher rise of 2.7%.
- Taking into account the current inflation trends among other sources it is indicated that even 3% may not be too high.
In October this year, the official COLA number will be declared which will be premised on CPI-W for the third quarter of 2024 urban wage earners and clerical workers consumer price indices.
What This Means for Beneficiaries
On condition that these projections are accurate, then Social Security beneficiaries may expect a small rise in their monthly payments. An average retired worker presently gets about $1,943 per month. A 2.6% COLA would increase their monthly check by roughly $50.52 and a 3% COLA could boost them up to around $58.29.
It is important to remember however that no matter how much the actual raise is, it will always be good news for elderly people who are grappling with increased living expenses. There’s still an opportunity to have the exact COLA figure higher or lower depending on inflation data later in the year.
Mixed Reactions from Seniors
The seniors have mixed reactions to the forecasted COLA for 2025. Some of them are happy because their benefits will go up and help them afford more expensive food, housing, and healthcare. However, some others criticize it as being lower than the 8.7% COLA enacted in 2023 and the 3.2% one put in place last year arguing that it may be too small to alleviate their daily expenses considering inflation’s continued impacts on these costs.
COLA’s Role in Protecting Retirement Income
To protect the purchasing power of senior citizens and other beneficiaries, COLA is a very essential mechanism that ensures the social security benefits do not falter behind inflation. If this were to be done away with, it would impact negatively on their living standards as the value of social security benefits would get eroded over time.
On the contrary, others argue that the way COLA is calculated currently may fail to capture seniors’ real rate of inflation since it does not adequately account for soaring healthcare and housing costs which are more burdensome on older Americans.
Preparing for the Future
Even if the 2025 COLA provides some ease, seniors should take charge of their financial matters and look for other means of earning a living as they move towards retirement. For instance, this may include setting up a budget, cutting down on costs or even engaging in part-time jobs or any other ventures that can bring money into hand.
Key Takeaways:
- The projected COLA for 2025 ranges from 2.6% to 3%.
- The official announcement will be made in October 2024.
- The actual COLA may be higher or lower depending on inflation data.
- While any increase is beneficial, it’s important for seniors to actively manage their finances.