Here at the Council for Retirement Security, we’re dedicated to seniors’ well-being in retirement — so we believe it’s the perfect time to discuss the 2025 cost-of-living adjustment (COLA).
We discuss this event every year, from both sides of the angle. You may have read past publications where we talked about the possibility of another record COLA — who doesn’t want that?
But there’s always the chance of next year’s adjustment being less or even non-existent. We cannot allow this to happen. This means we need to understand what could influence the 2025 COLA.
What Could Impact the 2025 COLA
The 2025 COLA hasn’t been announced officially. But 2024’s increase was only about a third of the record number we saw in 2023.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the price changes of goods and services purchased by these workers. The Social Security Administration (SSA) uses the CPI-W from the third quarter of the current year to the third quarter of the previous year to calculate the COLA for the upcoming year.
Several factors can impact the 2025 Social Security COLA, including inflation, economic growth, and government policies.
Inflation is one of the most significant factors affecting the COLA, as it measures the rate of price increases for goods and services. If inflation is high, the COLA will be larger — however, this also means it will struggle to go as far, as evidenced by the shortfall of 2023’s record 8.7 percent boost.
In addition, government policies such as tax changes, stimulus spending, and changes to Social Security regulations can affect the COLA calculation. Some say benefit cuts may be coming, either in the form of direct slashes in benefit amounts or acts like raising the retirement age.
Overall, the 2025 Social Security COLA will depend on several economic and policy factors that can be difficult to predict. But there’s one more factor that impacts it — us, as current and future retirees, making our voices heard. If you support our mission to make yearly COLAs adjusted for inflation a reality, please sign our petition.
