There is good and less good news

If you're one of those people who gets the majority of your retirement benefits from Social Security, you may be curious to see how big your raise will be in 2025. Unfortunately, you'll have to wait a little while longer.

The Social Security Administration can't announce an official Social Security cost-of-living adjustment for 2025 until October 10. That's because these COLAs are calculated based on third-quarter inflation data. And since the third quarter of the year isn't over yet, it's too early to have a 100% accurate number.

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However, estimates are available for Social Security's COLA for next year based on inflation figures available so far, and the latest forecast calls for the increase to be 2.5% in 2025.

This is not the best news.

Not only is a 2.5% increase quite small to begin with, it is also the smallest COLA since 2021. In fact, Social Security recipients have received generous COLAs since inflation began in 2021, so a 2.5% increase might seem even smaller.

While you may not be happy that your Social Security COLA may be as low as 2.5% in 2025, there is still a silver lining to recognize.

Lower COLAs go hand in hand with lower living costs

Social Security COLAs are based on changes in the consumer price index for urban wage earners and office workers from one year to the next. When inflation soars, Social Security benefits tend to rise sharply. When inflation subsides, benefits do not rise as much.

The latter scenario awaits retirees in 2025. The reason a 2.5% Social Security COLA isn't so bad is simple: It's an indication that the cost of living isn't rising that quickly.

Another way to look at it is that you may have seen a significant increase in your benefits over the past few years. But you've probably also had to contend with higher prices at the grocery store, gas station, and pretty much everywhere else.

Now that inflation is easing, you may be spending less on these and other essential expenses, so all in all, things should really even out.

It is best to have an income outside of social security

A big reason so many seniors are panicking about a modest Social Security COLA for 2025 is because they have no savings and rely on those benefits to fully cover their expenses. But that's a pretty scary way to live.

If you're retired and stuck in this situation, getting into the gig economy could be an effective way to put more money in your pocket and help you build cash reserves. That way, you'll have a cushion for unexpected bills or inflationary surges that hit before your Social Security benefits have a chance to catch up.

But if you're not yet retired, let the stress retirees have over their Social Security benefits remind you that you don't want to end up in a situation where you're relying on an annual increase in your benefits to make ends meet. Instead, save as much as you can during your working years so you can build up a nice nest egg for your retirement payments. If you end up with a decent nest egg, you won't have to spend much of each retirement year worrying about what the next year's benefits will be.

The $22,924 Social security bonus that most pensioners completely overlook

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