Social Security recipients’ cost-of-living adjustment (COLA) may drop to 1.4% in 2025 from 3.2% in 2024. Senior Citizens League projections indicate the lowest COLA since 2020. December’s consumer-price index for urban wage earners and clerical workers (CPI-W) was 3.3%, slightly higher than 2024’s 3.2% COLA.
Social Security Recipients Face Potential Drop in 2025 COLA – Impact on Millions of Retirees
Senior Citizens League Social Security and Medicare policy analyst Mary Johnson says this isn’t necessarily good news, especially if housing, hospital, and auto insurance costs stay high. The COLA reflects the CPI-W, which emphasizes urban non-retiree expenses, including transportation, food, and clothing.
The 2025 COLA estimate may change during the year, and the formal release is expected in October. Over the past two decades, the average COLA has been 2.6%, indicating inflation rather than a rise. However, it matters to 67 million Social Security recipients.
Half of the 65-year-old U.S. population lives in households receiving at least 50% of their income from Social Security. The Social Security Administration reports that 25% of elderly households rely on Social Security for at least 90% of their income.
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Rising Medicare Costs Threaten Social Security COLA in 2025
Increasing Medicare Part B rates could reduce the 2025 COLA prediction despite the impact on retirees. This increases financial strain on Social Security claimants, potentially lowering their income.
The Social Security community anticipates the October announcement, hoping for changes to help retirees cope with rising living costs. The decision will affect millions of Americans who rely on Social Security to fund retirement expenses.