The 2025 cost-of-living-adjustment is about to be determined, and it might not go as far as some retirees hope.
We’re about two weeks away from the much-anticipated announcement of the 2025 Social Security cost-of-living adjustment (COLA). The government will reveal it on Oct. 10, helping beneficiaries plan their budgets for next year.
We don’t know what the COLA will be yet, but there are already predictions. Here’s a closer look at how much the average check will likely increase in 2025.
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The 2025 COLA is expected to be 2.5%
The latest projection from The Senior Citizens League puts the COLA estimate around 2.5%. This is below the 3.2% hike recipients got this year and reflects cooling inflation.
Since the COLA is a percentage, which the Social Security Administration applies to your existing benefits, you can get a good approximation of your 2025 benefit by applying the projected percentage to the current amount. For example, the average Social Security benefit for retired workers as of August was $1,920 per month. If we add the 2.5% projection to this, we get an extra $48, bringing the average check in 2025 to about $1,968. That’s an extra $576 per year.
What to do if the COLA doesn’t go as far as you had hoped
That probably would not be as much as many are hoping for. They argue that the COLA computation doesn’t actually help checks keep up with inflation. The Senior Citizens League found that benefits have actually lost 20% of their buying power since 2010. So even with the COLA, you could wind up spending more of your own money to cover your expenses.
Planning ahead can help minimize this shock. If you have personal savings, you can fall back on these. Those without much of a nest egg might have to try to diversify their retirement income. This could involve taking a part-time job, renting out or selling extra property, or considering strategies like a reverse mortgage. Anything that minimizes your reliance on Social Security can help.
You might also qualify for certain government benefits to help with your essential costs. Look into assistance programs for expenses like food, housing, utilities, and healthcare in your area to see what your options are and what criteria you must meet to claim them.
Once you know how far your checks will go and how much you’ll get from Social Security, plan your budget for 2025. After a month or two, revisit it to make sure it’s working for you and make adjustments as needed.
