Millions of seniors today rely on their monthly Social Security benefits to make ends meet. And for this reason, retirees all over the country are eagerly awaiting news of a 2025 cost-of-living adjustment (COLA).
The purpose of annual COLAs is to help seniors on Social Security maintain their buying power as inflation makes life more expensive. Some people collect Social Security for decades, so it's imperative that those benefits get a yearly boost to help seniors keep up with rising costs.
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Because Social Security COLAs are calculated based on third-quarter inflation data, it's too soon to have an official number for 2025. That information won't be available until October.
However, based on recent inflation data, experts can try to predict what sort of raise seniors on Social Security might be looking at for the coming year. And to that end, there's an updated number to work with. Unfortunately, it might not be a number Social Security beneficiaries are happy with.
Next year's Social Security COLA could be 2.57%
Inflation slowed a bit in July, and as a result, the nonpartisan Senior Citizens League is now estimating a 2.57% Social Security COLA for 2025. That's a notch below the 2.63% COLA the group had called for a month prior.
In context, 2.57% is by no means the smallest COLA Social Security recipients have ever gotten. But it's also a notable dip compared to this year's 3.2% COLA. So it's understandable that seniors might be disappointed with this update.
The news isn't all bleak
A smaller Social Security COLA in 2025 might seem like terrible news at first. But let's also remember that the 2.57% estimate above is just that: an estimate. It's not set in stone, and we still have a couple more months of inflation data to factor into that number.
But more so than that, a smaller Social Security COLA from one year to the next is an indication that the pace of inflation is slowing. And that right there is good news, since it could spell relief for retirees in the context of affording everyday expenses.
To put it another way, a larger Social Security COLA in 2025 would mean an uptick in inflation and higher costs at the pump, supermarket, and just about everywhere else. So what seniors lose in the form of a less generous Social Security raise, they stand to gain in the form of not seeing their essential costs rise as rapidly.
That said, those who have been struggling to make ends meet on their monthly Social Security checks alone should consider the latest COLA estimate to be a wake-up call to seek other sources of income.
Even if next year's COLA ends up coming in higher, living on Social Security alone is not an easy thing and is likely to lead to a world of struggle. Joining the gig economy for an income boost could be a great way to generate some supplemental income that makes life less financially stressful.
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