Senior citizens across the U.S. are predicted to see their annual COLA increase drop by almost two percent, according to a forecast from a leading non-partisan advocacy group.
Based on the January Consumer Price Index (CPI) report released on Tuesday, The Senior Citizens League (SSL) has predicted the 2025 Cost of Living Adjustment (COLA) to be 1.75 percent. The change, although not yet certain, will affect all those who claim benefits from the Social Security Administration, which distributes pensions and other welfare benefits.
COLA is the rate at which Social Security benefits are increased based on inflation, and a new rate is released every year. It is subject to the percentage increase of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In January, this was recorded as being at 2.9 percent. The updated rate for COLA in 2025 will be based on the average rate of inflation during the third quarter of this year—July, August and September 2024.
The SSL prediction is lower than the Congressional Budget Office (CBO) forecast, which has estimated COLA to be 2.5 percent. In its press release issued on Tuesday, February 13, the SSL said: “The CBO uses a different methodology than TSCL’s, but clearly, inflation rates are expected to fall from 2023 levels, and the COLA for 2025 will also be lower.” Newsweek has contacted the SSL via email for additional comment outside of normal working hours.
GETTY
While an official rate for 2025 has not been announced, Mary Johnson, TSCL’s Social Security and Medicare policy analyst, has said future predictions could be higher or lower than January’s estimate.
“My estimates change month to month based on the most recent CPI data,” she told USA Today. “We still have eight months of data to come in and a lot could change.”
Current predictions fall considerably short of the official COLA rate in recent years. In 2023, the COLA rise was 8.7 percent due to high inflation rates, the largest hike in 40 years. This year, COLA is set at 3.2 percent. This means the estimated average monthly retirement benefit will increase by $59 per month for 2024, up from $1,848 to $1,907, according to a report by NBC News.
While the increase was certainly welcome for Social Security recipients amid rising living costs, due to the 8.7 percent hike in 2023, some may have been pushed into a higher tax bracket if they have additional income from a job or other source.
If your only income is your Social Security benefits, you are typically not required to file a tax return, which means you do not need to pay taxes on your benefits.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.