Title: Keep an Eye on These Two Factors to Estimate Your 2025 Social Security Increase
2024 is almost halfway gone, and many seniors on Social Security are eagerly awaiting news about the 2025 Cost-of-Living Adjustment (COLA). However, we won't have definite figures until October. In the meantime, here are two factors to keep tabs on to roughly predict next year's COLA:
1. Inflation
Inflation has been a persistent issue since 2021. After reaching its peak in 2022, it's fortunately been on a downward trend, leading to more reasonable price increases recently. But don't let current grocery prices deceive you; the COLA is calculated based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). A rise in the CPI-W from one year to the next is necessary for Social Security benefits to increase.
According to the Senior Citizens League, the most recent CPI-W data suggests a possible 2.57% COLA for 2025. However, inflation trends in the upcoming quarter may influence this figure, either boosting or decreasing it.
2. The Cost of Medicare Part B
The cost of Medicare Part B doesn't factor into the COLA calculation, but any increase in this cost affects the COLA. In 2024, the standard Part B premium rose from $164.90 to $174.70 per month. This $9.80 increase last year reduced the automatic $59 per month increase in Social Security benefits for many seniors, potentially leaving them with only a $49.20 increment.
For 2025, Medicare Part B is expected to cost an additional $10.30 per month, which may erode the 2025 COLA, should it materialize.
If your budget heavily depends on the upcoming COLA to make ends meet, remember to manage your expenses wisely. Scrutinize your spending to identify redundant or unnecessary expenses, consider relocating to save on housing costs, and if possible, explore opportunities in the gig economy to supplement your income.
In the context of retirement finance, many seniors rely on the Cost-of-Living Adjustment (COLA) to help cover increasing living expenses. However, the 2025 COLA projected by the Senior Citizens League might be affected by the trends in inflation during the upcoming quarter.
Managing your finances wisely is crucial if you heavily depend on the upcoming COLA. This could include reviewing your budget to eliminate unnecessary expenses, considering a move to a less expensive location, or exploring part-time work opportunities in the gig economy.
