Social Security Squeeze: 2025 COLA Forecast Leaves Seniors Bracing for Smaller Bump
As of October 10, 2024, millions of Americans anxiously await news from the Social Security Administration. The big reveal? The cost-of-living adjustment (COLA) for 2025. But this year, the news might not be as rosy as retirees hope.
Analysts predict a more minor increase than last year’s 3.2% bump. Why? Inflation has cooled down. The August 2024 Consumer Price Index showed prices up only 2.5% from the previous year. This slowdown in price hikes means Social Security recipients might see a more modest raise in their checks.
This matters a lot for the 68 million Americans receiving Social Security benefits. More than a third of retirees say these checks are their primary source of money, so even a small change can significantly impact their daily lives.
The COLA isn’t just a random number. Since 1975, the Social Security Administration has adjusted benefits each year based on inflation and changes in the consumer price index. It’s a way to help seniors keep up with rising prices. But it’s not always enough.
The 2025 COLA could be as low as 2.5% if predictions hold true. That would mean the average Social Security recipient would get about $48 more monthly. The average check would be $1,966.
But some groups think that’s not enough. The nonprofit Senior Citizens League is pushing for a more significant increase. Shannon Benton, the group’s executive director, says, “Ensuring that seniors have enough to feed and house themselves with dignity is a major reason we advocate for a minimum COLA of 3%.”
Benton points out a stark reality: about two-thirds of seniors rely on Social Security for more than half of their monthly income. Even more shocking, 28% depend on it entirely.
The COLA has been higher in recent years, hitting 8.7% in 2023. This was mainly due to the economic fallout from the COVID-19 pandemic. But as the economy stabilizes, these big jumps are becoming a thing of the past.
It’s not just the COLA that might change. The Social Security Administration is also expected to announce changes to how people qualify for benefits. In 2024, you needed to earn more than $6,920 to get four work credits (the maximum allowed per year). This amount is likely to go up in 2025.
There’s also talk about raising the income cap for Social Security taxes. In 2024, earnings above $168,600 weren’t taxed for Social Security. This cap might increase, affecting higher earners.
For now, seniors and other Social Security recipients are waiting. They won’t get official notice of changes to their benefits until September, which is a long time to wonder how far their checks will stretch in the coming year.
As we look ahead to the October announcement, it’s clear that many Americans will be watching closely. These numbers aren’t just statistics for millions of seniors – they’re the difference between comfort and hardship. The coming COLA might be smaller, but its impact on lives nationwide will be anything but.