Social Security COLA 2025 Predictions Ahead of Decision

Only around two weeks remain until seniors find out the Social Security cost-of-living adjustment for 2025. Newsweek spoke with experts about what to expect and why.
Social Security benefits change each year in line with the COLA, which reflects the inflation of the previous year so that seniors retain their purchasing power.
While the COLA was 3.2 percent this year, experts have warned that next year’s payments are unlikely to increase by that much again.
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The Senior Citizens League most recently predicted the 2025 COLA will be just 2.5 percent, down from the group’s previous estimate of 2.57 percent.
A 2.5 percent increase would mean seniors would get an extra $48 on average, and the monthly average would be $1,968.
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, also said the COLA will likely come in around 2.5 percent due to slowing inflation.
“The COLA is tied to inflationary changes, so as the rate of inflation decreases, so does the COLA,” Thompson told Newsweek. “This will be the lowest increase in the COLA since 2021 when the increase was 1.3 percent.”
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Seniors might have become accustomed to higher COLAs in recent years. While 2024 saw just 3.2 percent, the COLA was set far higher at 8.7 percent in 2023. That was the largest increase since 1981 when the COLA was 14.3 percent.
Some predict the COLA could be even lower than 2.5 percent, which might be a shock to seniors who rely on their benefits.
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Joseph Patrick Roop, the president of Belmont Capital Advisors, said he anticipates the COLA to be somewhere between 2.1 and 2.5 percent, more in line with what Social Security’s increases have been in the past.
“While other inflation is much higher at the grocery store and college campus, I would also remind seniors that Medicare premiums that mandatorily come out of Social Security have been growing at a rate of 7.42 percent for Part B and 6.73 percent on Part D,” Roop told Newsweek. “This is a large driving factor why many times the revised income goes down on Social Security even after a small COLA.”
Michael Ryan, a finance expert and the founder of michaelryanmoney.com, said he thinks the COLA will be between 2.3 and 2.7 percent.
While Ryan said the 2025 COLA will provide some financial relief, it likely won’t fully make up for the cost increases seniors face on Medicare, rent and groceries.
“Medicare Part B premiums are expected to increase. This will eat into the COLA adjustment. Seniors will need to allocate a larger portion of their benefits to healthcare costs,” Ryan told Newsweek.
He added: “While food inflation has moderated, prices remain high. The COLA will only partially cover increased grocery expenses for many seniors.”
Due to this, many seniors might need to turn to part-time work or figure out a way to monetize their hobbies.
The Social Security Administration is expected to officially announce the COLA on October 10 once they have the most recent inflation data.
Despite the fact that COLA protects seniors from inflation, many feel it’s not enough of a raise to their benefits and still struggle to make ends meet.
Around 80 percent of retirees wanted better inflation protection, according to a survey from the Senior Citizens League.
Some have suggested the consumer price index for the elderly be used instead of the consumer price index for urban wage earners and clerical workers to accomplish this. But that’s unlikely to change before the 2025 COLA is set in stone.
“While prices are still higher than they were a few years ago, data supports that inflation in general is cooling, and as a result, the bump isn’t as substantial as past ones,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “At the same point, it’s still needed additional income that can help to cover costs of everyday items.”