Retirees dependent on Social Security benefits are set to see the smallest cost-of-living adjustment (COLA) increase since 2021, with the latest forecast at 2.5%. This marks a minor decline from last month’s estimate of 2.6%, attributed to a continued cooling of inflation. The new prediction for the 2025 COLA comes from Kiplinger’s chief economist, David Payne, and is based on inflation data released by the Bureau of Labor Statistics.
Currently, the average retiree receives about $1,870 per month, which means the 2.5% increase would translate to approximately $47 more per month or $564 annually. However, experts like Kip’s Dan Burrows indicate that this modest rise may fall short for seniors to keep pace with ongoing increases in costs of living, such as energy, clothing, transportation, and housing that contribute to inflation.
The COLA for 2025 will begin reflecting in Social Security payments starting January of that year, though early payment may occur occasionally due to holiday or weekend scheduling.
Some legislators advocate for a change in how COLA is calculated, pointing out that Medicare costs are not included in the Consumer Price Index (CPI) used to determine COLA adjustments. Currently, the CPI-W, which calculates price changes based on working adults under the age of 62, is utilized. Critics argue that the Consumer Price Index for the Elderly (CPI-E) would better represent expenses that older adults face, particularly in healthcare and other regular costs.
In related news, the Social Security Administration is set to transition all users who created their accounts before September 18, 2021, to the Login.gov platform next week. Beneficiaries who already have a Login.gov account won’t need to take any action. Those who do not yet have a Login.gov account can transition easily by logging into the my Social Security website, where they will be given the option to migrate to the new system and will need to set up a second authentication method.
To prevent fraud and identity theft, it is advised that individuals create their my Social Security accounts, as this helps mitigate the risk of criminals using stolen Social Security numbers to open accounts in someone else’s name and redirect benefits. Each individual can only maintain one my Social Security account per Social Security number.