Good News: Social Security COLA Expected To Rise In 2025

Seniors in the United States will face a social security trend of increasing cost of living adjustment (COLA) in 2025, after more than thirty years.

The COLA is responsible for the updates in social security payments which are proportionate to the impacts of the inflation. Seniors endure inflammation in the present economy in everything from housing to healthcare, and experts anticipate that the Social Security COLA will increase by up to 2.7 percent.

The Rising Social Security COLA Trend

Experts predicted that COLA would increase by 2.7 percent in 2019. If this turns out to be the case, seniors will receive a COLA of 2.7 percent or higher for four years in a row for the first time in 31 years. Since 2022, when it was established at 5.9 percent, the senior savings has continuously had a high COLA, according to Newsweek.

But the ratio abruptly increased and, the following year in 2023 it reached 8.7 percent. The official COLA for the next year will not be known until October. This change is based on the consumer price index, which estimates inflation for office workers and urban payees. The index computes the price variations over a given period using data from July, August, and September.

From 1988 and 1993 COLA received raises of 2.7 percent for four straight years.

Illusion of Increased Purchasing Power

Seniors may be excited about this social security rise because they’re convinced it would result in an increased income for them.

But rather than giving them more purchasing power, this tendency just serves as a reminder of the inflammation they already have to deal with. The consistent inflation and the COLA hike are intimately correlated.

“While this increase for yet another year may feel like an additional layer of support for recipients, there’s a reason it continues to go up historically: prices for seniors across the board are significantly higher” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin.

He stated that while the increase in COLA is beneficial to the recipients, it is not a true “solution to inflation” and seniors should exercise caution when allocating their money.

What is the COLA for Social Security in 2025

In July, the COLA projected for 2025 was 2.7%. If the COLA is 2.6% in 2025, it will be “considered the average amount that COLAs have been over the past two decades and the lowest since 2021,” said Mary Johnson, a retired analyst for the nonprofit Senior Citizens League who studies and calculates the COLA predictions.