“Historic” cost of living adjustments in 2025
According to various financial sources, cost-of-living adjustments (COLAs) and Social Security contribution increases are expected to reach “historic” proportions next year.
But whether they will be historically “good” or “bad” somehow depends.
According to The Motley Fool, Social Security COLAs have not yet been released to the public and will not be until Thursday, October 10.
Newsweek explains that this benefit, which is available to everyone age 62 and older, is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects the way working U.S. citizens spend their money.
Sometimes there is no COLA, Newsweek adds. In other years, like 2023, there have been huge increases of up to 8.7 percent.
However, the same Motley Fool article states that these adjustments are forecast to “result in something not seen in about 30 years”: The COLA for 2025 is estimated to be about 2.63 to 2.7 percent, depending on who you ask (e.g. TheStreet). This will be the first time in this roughly three-decade period that COLAs have reached at least 2.6 percent four times in a row (2022, 2023 and 2024 saw increases of 5.9 percent, the aforementioned 8.7 percent and 3.2 percent, respectively).
While that sounds great, The Motley Fools points out that current inflation rates are driving up the prices of necessary retirement needs like mortgages and healthcare. An increase from 8.7 percent in 2023 to 2.6 percent in 2025 may be considered rather stressful for benefit recipients’ wallets.
Regardless of the estimates, no one will really know until October 10th.
