Social Security retirees are expected to receive an increase in 2025 as cost of living adjustments (COLAs) are included in the benefits program to prevent inflation from diminishing the value of their benefits.
Regrettably, although seniors will be pleased to hear about an upcoming increase, beneficiaries should also be ready to hear some unfavorable information regarding their 2025 COLA. It is highly likely that they will experience disappointment. Here is the reason for this.
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Retirees may receive a lower amount of money than they anticipate in the 2025 Cost of Living Adjustment (COLA).
Next year’s A government program that provides financial assistance to individuals who are retired, disabled, or unemployed. The upcoming benefits increase for seniors is expected to be less than what retirees are used to, which is likely to be disappointing for them.
The official cost of living adjustment figures for benefits will not be known until October as they are calculated using the third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The initial third-quarter data will be released soon. Aug. 14, We will receive additional information, however, the final answer will not be known until the September figures are published on October 10, 2024.
Still, we do We possess Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for the initial half of the year. also There are predictions regarding the third-quarter statistics for seniors, and unfortunately, the outlook is not positive. The Senior Citizens League has forecasted a mere 2.63% increase in benefits for 2025.
The increase in benefits for retirees has been lower than in previous years. Here are the Cost-of-Living Adjustments (COLAs) that have been implemented in recent years:
- The percentage in January 2024 is 3.2%.
- In January 2023, the percentage is 8.7%.
- The inflation rate for January 2022 was 5.9%.
This indicates that the cost of living adjustment (COLA) for 2025 will be the smallest increase that retirees have seen since 2021. Seniors are likely to be taken aback when they realize that their payments are not rising by as much as they have in recent years.
Retirees should understand that the purchasing power of their benefits is decreasing.
Regrettably, a COLA that is lower than anticipated is only the beginning of the issues retirees are encountering with their cost of living adjustments. The unfortunate truth is that these adjustments have not been matching the increasing prices that retirees have been facing for a significant period of time, even though they are meant to do so.
The issue lies in the fact that the COLAs assess the rise in prices of a selection of goods and services typically purchased by city wage earners and office workers, rather than retirees who generally allocate more of their budget towards expenses such as healthcare and housing. These items often experience price increases that surpass inflation rates.
Due to COLAs not effectively keeping up with increasing expenses, benefits have seen a 36% decrease in purchasing power since 2000. League for older individuals The smaller cost-of-living adjustment (COLA) expected next year will not be enough to address the financial gap. Seniors who have been facing difficulties in managing increased expenses and relying on the anticipated 2025 raise might have to explore other options to maintain their current standard of living. This could involve seeking part-time employment or adjusting their budget to reduce costs.
