Increase in Social Security checks in 2025

The Social Security Administration (SSA) is the federal agency known for providing Social security audits to help retirees and Americans with disabilities cover their living expenses and enjoy their retirement. These benefits are adjusted annually according to the COLA, which is designed to adjust Social Security checks for the inflation Americans experience on various things, including food, housing, and healthcare. According to the Senior Citizens League's (TSCL) updated COLA forecast for next year, benefits are likely to increase by only 2.5%, which is 0.7% less than the current cost-of-living adjustment for 2024.

The increase in social security checks confirmed for 2025 will not turn out as expected

Based on the Consumer Price Index (CPI)that's another drop. The group predicted a 2.63 percent increase in July. That forecast had already dropped to 2.57 percent in August. Due to ongoing inflation-driven price increases, there have been many COLA forecasts in recent months that have come out for higher estimates, Alex Beene, a financial literacy lecturer at the University of Tennessee at Martin, told Newsweek. According to recent data, inflation is starting to decline for some items, which will have an impact in the coming months. If the TSCL forecast holds true, seniors will receive the smallest COLA amount since 2021, when the increase in Social Security checks was just 1.3 percent.

The average monthly payout for retirees would rise to $1,920 when the government implements the 2.5 percent COLA next month, an average increase of just $48 on top of their Social Security checks. For beneficiaries who have grown accustomed to higher COLAs in recent years, the lower COLA could be a shock to the system. Kevin Thompson, founder and CEO of 9i Capital Group and a financial analyst, told Newsweek that the COLA estimate likely to follow consumer price index trends, it may be considered inadequate by many seniors due to the recency effect.

Thompson also stressed that the Cost of Living Adjustment (COLA) will not keep pace with rising health care and food costs. Prices for essentials like food and services continue to rise even as inflation eases. The COLA peaked at 8.7 percent last year and fell to 3.2 percent this year. However, Social Security checks are projected to have a lower COLA in 2019 because overall inflation has declined since then. Additionally, the Senior Citizens League stated in a previous report that the COLA will be significant this year because many seniors reported that it did not keep pace with their actual spending last year.

The increase in social security checks should be calculated differently

In a TSCL survey of 1,550 respondents, 69 percent said their household spending exceeded the COLA they received last year, suggesting that many seniors will be spending more next year due to the lower COLA. According to 69% of respondents to a TSCL study of 1,550 participants, household spending exceeded the COLA received the previous year. This suggests that many seniors may face financial difficulties next year due to the reduced COLA. Ultimately, seniors will receive a raise to meet the additional demands on their purchasing power, Beene said. While the amount may not be as large as originally expected, it will still cover the cost of their spending.

Instead of using the index for urban wage earners and office workers, some researchers have argued that the COLA should be based on the CPI for the elderly. For example, Jonathan Price, national head of the pension practice at employee benefits consulting firm Segal, previously told Newsweek that the annual COLA is appropriate for a particular pensioner in order to ensure equal purchasing power, since the previous year was highly dependent on the life situation of the respective pensioner, both in terms of expenditure and other sources of income.