Social security COLA expected to rise in 2025: New forecast brings some happy news for retirees

In more than three decades, the seniors of the USA will experience a social security trend of rising cost of living adjustment (COLA) in 2025. The COLA is responsible for the updates in social security payments which are proportionate to the impacts of the inflation. In the current economy, seniors see inflammation in everything from housing to healthcare and the experts have analysed that the Social Security COLA will project up to 2.7 per cent.

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The trend of high COLA

The experts estimated a 2.7 per cent rise in COLA next year and if this happens, then for the first time in 31 years the seniors will receive a COLA of 2.7 per cent or above four years in a row. The senior save witnessed a consistently high COLA since the year 2022 when it was set at 5.9 per cent as reported by Newsweek.

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However, the percentage saw a sudden increase as it set to 8.7 per cent next year in 2023. The official COLA for next year will not be announced until October. This adjustment is based on the consumer price index, which measures inflation for urban wage earners and clerical workers. The index takes into account data from July, August, and September to determine how prices have changed over that period.

The last time COLA witnessed a 2.7 per cent raise for four years in a row was from 1988 to 1993

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Illusion of more buying power

This increase in social security might excite seniors for they believe it means a greater increase for them. However, this trend is merely a reminder of the inflammation that they are already coping with and does not increase their buying power. The increase in COLA is directly proportional to the consistent inflation.

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Alex Beene who is a financial literacy instructor at the University of Tennessee at Martin analysed, “While this increase for yet another year may feel like an additional layer of support for recipients, there's a reason it continues to go up in a historic fashion: prices for seniors across the board are significantly higher.” The increase COLA is a good thing for the recipients, he said, but it's not an accurate “solution to inflation,” and seniors should be mindful while spending their funds.

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