COLA Increase 2025: The cost-of-living adjustment (COLA) for Social Security in 2025 has been lowered from 3% to 2.7% because inflation was lower than expected in June. The change was changed from 3% to 3% because the consumer price index (CPI) only rose by 3% in June, down from 3.3% in May. When you take out the fluctuating prices of energy and food, the core rate also fell to 3.3%, which is the lowest level since April 2021.
The consumer price index for urban wage earners and office workers (CPI-W) dropped from 3.2% in May to 2.9%, which is used to figure out the COLA. Because of this drop, the 3.2% COLA that Social Security users started getting in January is now higher than what was planned for 2025. This worries seniors, who already have to deal with high inflation and prices going up for basic things.
COLA Increase 2025 Calculator: Find Out How the Next COLA Increase is being determined?
“Whether it’s a trip to the gas station, grocery store, or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” expressed Mary Johnson, a retired analyst for the nonprofit Senior Citizens League, according to Marca.
According to Schroders’ 2024 US Retirement Survey, Americans who are retired continue to have the most anxiety about inflation. Deb Boyden, head of Schroders’ U.S. Defined Contribution, highlighted the difficulties encountered by retirees on limited incomes, pointing out that the cost of necessities like food, housing, electricity, and healthcare keeps rising more quickly than the overall rate of inflation.
As inflation cools, Social Security recipients can expect a smaller COLA increase for next year. https://t.co/jrMoG5lYQt
— NBC News (@NBCNews) July 11, 2024
COLA Increase 2025: Retirees prepare for a reduced COLA in 2025
Seniors who depend on fixed incomes find it challenging to maintain their standard of living due to rising costs. The financial strain caused by the increasing prices of necessities forces seniors to seek ways to safeguard their assets and make their money stretch further.
The downward revision of the 2025 COLA projection underscores the persistent difficulties seniors face in coping with high inflation and escalating prices for essential goods. Retirees must explore strategies to mitigate the financial impact and ensure their financial security as the cost of living continues to rise.
Mary Johnson also stated that “persistently high prices for key essentials are causing distress for many older and disabled Social Security recipients.” Although decreasing inflation may lead to some areas of spending reduction, recipients who are retired or handicapped spend over half of their household budget on housing costs, which have increased by 5.4%. Furthermore, food costs continue to be unabatedly high.
These projections highlight the intricate relationship that exists between inflation and necessities for people who depend on Social Security income. Even though the 2025 COLA will be formally announced in October, people who rely on Social Security benefits will still be concerned about these problems.
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