The latest estimate for Social Security’s cost-of-living adjustment (COLA) for 2025 has increased to 2.4% following a sharp rise in inflation last month. According to the Bureau of Labor Statistics, the consumer price index (CPI) climbed 3.2% in February compared to a year ago, leading to the higher COLA projection.
Increases in shelter, medical, and transportation costs for older adults have outpaced overall inflation, further impacting the need for a higher COLA. The CPI-W index, on which the adjustment is based, rose by two-tenths in February to 3.1%.
The Social Security Administration determines the COLA annually based on the average CPI-W increases from July to September. Seniors saw a 3.2% increase in their benefits in 2024 to combat inflation.
Despite these adjustments, a survey by The Senior Citizens League revealed that many seniors are still struggling to recover from previous spikes in prices. Additionally, more Social Security recipients are now subject to taxes on their benefits due to recent COLA hikes. The income thresholds for this taxation have not been adjusted for inflation since its introduction in 1984, resulting in more taxpayers being affected over time.
Medora Lee, a reporter at USA TODAY specializing in money, markets, and personal finance, can be contacted at [email protected]. Readers seeking personal finance tips and business news can subscribe to the free Daily Money newsletter. Stay updated on the latest financial developments impacting older adults by visiting Poh Diaries.
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