Updated 2025 Social Security COLA Estimate Released

The cost of living adjustment (COLA) for retirement benefits may jump 3.2 percent in 2025, after April inflation data came in at 3.4 percent. The rate of price increases for last month ticked slightly lower from March’s 3.5 percent.

COLA is determined based on the dynamics of the consumer price index for urban wage earners and clerical workers, designed to help retirees get benefits that reflect the changes in the prices of goods and services in the economy.

Mary Johnson, former Social Security and Medicare analyst for nonprofit Senior Citizens League, and still follows COLA changes, suggested that for 2025, it could jump 3.2 percent, higher than the forecast she provided last month of 3 percent, according to MarketWatch. The outlet pointed out that the official COLA for next year will be made public in October by the government.

The Context

On Wednesday, the U.S. Bureau of Labor Statistics (BLS) revealed that the Consumer Price Index (CPI) accelerated at 3.4 percent in April, a slower pace than the prior month’s 3.5 percent.

While the overall rate slowed, prices for some goods and services did tick up. The index for cereals and bakery products went up 0.6 percent last month, after falling by nearly 1 percent in March, government data showed. But food prices overall did not change.

“The index for meats, poultry, fish, and eggs decreased 0.7 percent in April, led by a 7.3-percent decline in the index for eggs. The fruits and vegetables index declined 0.8 percent over the month, and the nonalcoholic beverages index fell 0.2 percent,” BLS pointed out.

Housing costs were up 5.5 percent on a yearly basis, though they were unchanged for the month and medical care services increased by 0.4 percent in April, slower than the 0.6 percent jump seen in March.

Views

While inflation has slowed in the month, experts say prices are still elevated.

“The higher inflation indicates that consumers are still experiencing an erosion in buying power,” Johnson told USA Today.

The 3.2 percent COLA jump that Johnson forecast will match what retirees received this year. But that forecast is higher than in January, when it was estimated that 2025 would see a COLA increase of 1.75 percent.

What’s Next

It’s unclear what the COLA would be by the time the government makes the official announcement of the rate for the coming year. That determination is set to be made in October, according to MarketWatch.

The outlet noted that over the last two decades, COLA has averaged about 2.6 percent.

“Housing takes up about 50 [percent] of the budget of retired and disabled Americans, so shelter costs going up 5.5 [percent] is a burden,” Johnson said, according to MarketWatch. “Food prices are still a major sticking point for seniors as well.”