A cooldown in inflation will doubtless result in a lukewarm cost-of-living adjustment for these receiving Social Security advantages.
Currently, it is estimated that Social Security advantages may see a 2.5% so-called COLA hike in 2025. If appropriate, it might be the smallest cost-of-living adjustment in three years. The COLA hike was 3.2% in 2024.
The estimate is predicated on the latest inflation numbers for August, launched on Sept. 11, and the inflation information for July. All that is wanted is the subsequent spherical of inflation information for September.
The Social Security Administration releases the precise determine for the cost-of-living adjustment every year in October after extra inflation information is understood. The CPI for September is about to be launched Oct. 10.
This yr's third-quarter inflation numbers can be in contrast with final yr's third quarter to get to the upcoming COLA determine.
More: 2025 Social Security COLA estimate dips with inflation however extra seniors face poverty
The Consumer Price Index elevated 0.2% on a seasonally adjusted foundation in August, the identical enhance as in July, in line with the U.S. Bureau of Labor Statistics. Year over yr, the CPI elevated 2.5% in August earlier than seasonal adjustment.
While some would possibly discover the newest estimate disappointing, a 2.5% COLA for Social Security advantages could be thought-about about common, in line with Mary Johnson, an unbiased Social Security and Medicare coverage analyst.
In 2023, retirees and others noticed an 8.7% COLA bump for Social Security advantages, in addition to Supplemental Security Income advantages. That was the largest inflation adjustment since 1981 when the COLA hike was 11.2%.
In 2022, the cost-of-living adjustment for Social Security advantages was 5.9%.
The cost-of-living adjustment was merely 1.3% in 2021 — making it one of many lowest will increase on document since 1975 when Social Security began automated annual cost-of-living allowances. It was 1.6% in 2020.
Next yr, those that obtain a median retiree advantage of $1,870 in Social Security advantages may see an additional $46.75 a month — or $561 a yr. But all that cash will not hit their wallets straight.
Medicare Part B premiums will go up in 2025, as properly, and the premiums can be introduced later this yr. It's doable that an additional $10 a month may go towards these premiums subsequent yr.
Earlier this yr, Johnson famous, the Medicare Trustees estimated that the Part B premium could be $185 per thirty days in 2025, a rise of $10.30 from $174.70 in 2024. The Part B premium, in addition to any voluntary withholdings for taxes, are robotically deducted from the month-to-month profit quantity by the Social Security Administration.
Contact private finance columnist Susan Tompor: [email protected]. Follow her on X (Twitter) @tompor.
