Social Security COLA likely to see decrease in 2025 due to inflation

As we move into 2025, the pace of inflation is finally starting to slow down, signaling potentially lower Social Security cost-of-living adjustments for retirees and other beneficiaries. According to estimates from experts like Mary Johnson, an independent Social Security and Medicare policy analyst, the cost-of-living adjustment (COLA) for next year may be around 2.7%.

This estimate is a slight decrease from previous predictions, which had pegged the COLA at 3%. In 2024, Social Security beneficiaries saw a 3.2% increase in their benefits, so this reduction in the estimated COLA for 2025 could have significant implications for retirees and others dependent on these benefits for their income.

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Despite the decrease in the rate of price growth overall, certain categories like shelter costs, food, electricity, and medical services continue to outpace the general inflation rate. For instance, the cost of groceries, as tracked by the Consumer Price Index, rose by a staggering 24% from 2020 to 2023, highlighting the challenges that beneficiaries may face in maintaining their standard of living.

It’s important to note that these estimates for the Social Security cost-of-living adjustment in 2025 are still subject to change. The official announcement will be made by the Social Security Administration in October, after comparing the third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for 2025 to that of the previous year. Based on this comparison, the COLA will be determined, with no adjustment made if there is no increase in the index.

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At Extreme Investor Network, we understand the significance of these changes in Social Security benefits for retirees and other beneficiaries. Our team of experts is committed to providing valuable insights and strategies to help individuals navigate the complex landscape of personal finance and retirement planning. Stay tuned for more updates on this developing story and other topics related to personal finance on our platform.

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