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Social Security payments will be affected by a COLA change in 2025
By Caitlin Cahalan,
1 days ago
The Bureau of Labor Statistics Consumer Price Index (CPI) has historically been used to inform Social Security Cost of Living Adjustment (COLA), which increases Social Security payments relative to inflation to maintain its purchasing power.
The August 2024 CPI report was published today, and the numbers may shrink the projected 2025 Social Security COLA.
The CPI update shows that consumer prices rose a modest 0.3% in August 2024, with an overall inflation rate of 2.5%. This marks the smallest 12-month increase since February 2021.
Core inflation, which excludes volatile factors like food and energy, grew steadily again at 3.2%, matching July 2024’s core CPI and most Wall Street forecasts.
How the CPI update will affect the 2025 COLA projection
COLA hasn’t been below 3% since 2020, but the August CPI indicates that the adjustment will only be 2.5% for 2025, despite the relatively high price of consumer goods.
The Senior Citizens League calculates that a 2.5% COLA would raise the average retiree's Social Security Payment to $1,920, an increase of $48 per month. While this adjustment is lower than the past few years, the twenty- year COLA average is 2.6% , making the 2025 projections in line with historical data.
However, the adjustment to Medicare Part B premiums won't be announced until 2025.
While inflation is the catalyst for increased costs of living, many believe that the high cost of goods is only one piece of the puzzle and that adjustments should also consider other factors. Retirees now argue that COLA isn’t keeping pace with the goods and services most seniors spend the most on, such as food, rent, hospital services, medication, and utilities.
However, there are specific policy changes that retirees and beneficiaries support that could make social security payments more effective for Social Security recipients:
58% of beneficiaries support COLA increases that accurately reflect the growing cost of living.
Half (49%) of beneficiaries support the government providing extra financial assistance for essentials like housing and healthcare.
45% support setting a minimum for guaranteed benefits, ensuring some financial security.
I did't need to see the debate ...I've been to the grocery store , the gas station , paid electric bills , insurance , etc for the last 4 years . I know the difference and YOU do too. The debate is over. TRUMP 2024 🇺🇲💯
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