As prices drop, the cost-of-living change for Social Security in 2025 might be less than the 3.2% increase seen this year.
Mary Johnson, a Social Security and Medicare expert who works on her own and used to work for the Senior Citizens League, says that COLA could be 2.6% in 2025. This prediction is different from the one she made in July, which called for a 2.7% rise.
Johnson said that the 2.6% rise would be the lowest COLA since 2021 but about the same as it has been over the last 20 years.
Alex Moore, senior partner at Blacksmith Professional Services and a Social Security and Medicare statistician for the Senior Citizens League, said that the COLA could be as low as 2.57% in 2025. This is lower than the 2.63% they predicted last month.
The actual news about COLA 2025 comes out in October. COLA is not a raise; it’s a change that helps pay for inflation.
The Consumer Price Index report that came out on Wednesday showed that inflation is low, but housing is still a big problem for the economy. The Social Security COLA is based on the Consumer Price Index, which shows that the rate of inflation fell from 3.0% in June to 2.9% in July.
As of June 2024, the Social Security Administration said that the average income from Social Security was about $1,781. A COLA of 2.6% would make that amount go up by about $46 a month. But Medicare Part B premiums are taken out of Social Security checks immediately, so people who get them won’t see the full amount.
The rates for Medicare Part B will likely go up from $174.70 a month in 2024 to about $185 a month in 2025. In the end of this year, the Centers for Medicare and Medicaid will make the official statement about premiums.
An AARP study found that among Americans aged 65 and up, 40% depend on Social Security for half or more of their income, and 14% depend on it for 90% or more of their income.
A poll by the Senior Citizens League in July of 2,016 seniors found that one of their biggest worries about retirement is that inflation will keep prices high and cause them to spend all their savings.
Also, 78% said their monthly budget for things like food, medicine, and rent was bigger than it was the year before. 63% were afraid that their income in retirement would not be enough to pay for the things they need.
A study from the Social Security and Medicare Board of Trustees in May said that Social Security will run out of money by 2035. Society will only be able to pay 83% of payments at that point.
