...
By Aliss Higham
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
An expert has predicted a drop in the Cost of Living Adjustment (COLA) for Social Security benefits in 2025.
Mary Johnson, an independent Social Security and Medicare analyst, has said that seniors, survivors and those with disabilities will see their payments rise by 3 percent next year; this is down from a previous prediction of 3.2 percent in May, according to a report by MarketWatch. Newsweek has contacted Johnson for comment via email outside of normal working hours.
Read more: Checking Account vs. Savings Account: Which is Best for You?
Read More on Personal Finance
COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The annual adjustment aims to keep benefits rising with inflation over time, providing a boost for all types of Social Security payments, including retirement, disability and survivor benefits.
Other forecasts predict an even lower increase for Social Security recipients. "The
2025 COLA prediction is about 2.57 percent, down from 2.66 percent last month," said The Senior Citizens League's (TSCL) Social Security and Medicare statistician Alex Moore, who is managing partner at Blacksmith Professional Services. Financial blog CalculatedRisk has predicted that the 2025 COLA "will probably be between 2.5 percent and three percent this year, the smallest increase since 1.3 percent in 2021."
Unfortunately for Social Security claimants, the current Congressional Budget Office prediction is even lower, at 2.5 percent.
Read more: Best Place for Short-Term Investing: CD vs. High-Yield Savings Account
For now, these are just predictions, with the rate for 2025 due to be officially announced in October by the Social Security Administration (SSA). COLA is based on the percentage increase of the CPI-W during the third quarter of the year: July, August, and September.
However, the latest expert COLA predictions are a far cry from the historic rise of 8.7 percent that was granted to retirees and other benefit claimants due to high inflation following the coronavirus pandemic. In 2022, COLA increased benefits by 5.9 percent. Across the board, the expert predictions for 2025 are also lower than the increase for 2024, which was 3.2 percent.
TSCL has said its predicted increase would not go far enough in helping elderly Americans keep up with the cost of living. It found that among "roughly 1,550 participants in TSCL's 2024 Senior Survey, 69 percent said their household costs rose faster than the COLA last year," with food and housing costs causing the most concern among seniors.
Research conducted by the TSCL has also found that so far in this decade, COLA increases have failed to keep up with inflation. It found that just one of the five COLAs implemented so far in the 2020s - 20 percent - has outdone inflation, compared to 40 percent in the 2010s and 60 percent in the 2000s and 1990s.
Other financial experts have previously raised concerns with the way COLA is calculated. In an April 28 article for financial advice website Motley Fool, author Trevor Jennewine said that retirees have missed out on $1,756 due to COLA being calculated using the CPI-W.
...
View 0 Comments
Submit Correction
View Editorial & AI Guidelines