Despite recent government data indicating a decrease in inflation, many retirees are still facing challenges due to elevated costs. Predictions for next year’s Social Security cost-of-living adjustment (COLA) suggest minimal relief, with an estimated increase of 2.6% for 2025, according to Mary Johnson, an independent analyst focused on Social Security and Medicare policy. This figure represents a decline from the 3.2% increase beneficiaries received in 2024 and is significantly lower than the 8.7% and 5.9% adjustments provided in 2023 and 2022, respectively. The forecasted COLA for 2025 would mark the lowest increase since 2021 but aligns with the average adjustments seen over the past two decades.
It’s important to note that the 2025 estimate may change, as the annual Social Security COLA is calculated based on third-quarter data from a specific measure of the consumer price index known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The official adjustment is typically announced by the Social Security Administration in October as more CPI data becomes available.
The financial strain on older Americans is evident, with a recent AARP survey revealing that 61% of adults aged 50 and over are concerned about their retirement savings. In addition, 37% express worries about managing essential expenses like food and housing, while 70% fear that price increases will outpace their incomes.