(ConservativeJournal.org) – Salaried employees generally expect a raise toward the end of the year, which is the same time when Social Security beneficiaries find out what their annual cost-of-living adjustment (COLA) will be.
Social Security benefits are adjusted every year to maintain the buying power of seniors who are dependent on their limited income. Last year’s adjustment was high due to the concurrently high rate of inflation over the past year. The COLA for 2024 was a 3.2% bump from recipients’ 2023 benefits.
Recipients will likely not receive as high a boost at the end of 2024 if the current predictions are accurate. The 2025 COLA is projected to be roughly 2.57% according to researchers with the Seniors Citizens League. They recently reduced their prediction from 2.66% based on data from the Consumer Price Index (CPI). The CPI is a measure of how the cost of goods in the marketplace changes over time.
Social Security COLA is calculated based on a specific change for Urban Wage Earners and Clerical Workers (CPI-W) which is a subtype of the CPI.
While beneficiaries may have wanted to see a bigger increase in their checks, the reduction is actually an indicator of cooling inflation in the marketplace, meaning that individual dollars aren’t losing their value as rapidly as they have in previous years. Many consumers have noted dramatic increases in basics like eggs, bread, and gasoline since the pre-pandemic period.
Officially, recipients will have to wait until October for the announcement from the Social Security Administration. The data from the third-quarter CPI-W is required to make the final calculation. It is fair to presume that their COLA will not be as high as it was the previous year, however.
If you’re on a limited income, it may be a good idea to budget and plan for a COLA that is close to 2.5%. Spending less by reducing overhead on basics like rent or mortgage is one possible alternative. Financial advisers have also suggested potentially moving to a part of the state or country where cost of living is lower.
Copyright 2024, ConservativeJournal.org
