COLA is based on the consumer price index for urban wage earners and clerical workers. It ensures retirees get benefits that reflect changes in the economy’s prices of goods and services.
Mary Johnson is a former analyst for Social Security and Medicare.
She worked at the nonprofit Senior Citizens League, She still monitors COLA changes. She suggested that the 2025 increase could reach 3.2 percent. This is up from her earlier forecast of 3 percent. MarketWatch reported that the government will announce the next year’s official COLA in October.
On Wednesday, the U.S. Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 3.4 percent in April, slightly down from 3.5 percent in March.
Despite the overall slowdown, some prices did rise. For example, the index for cereals and bakery products increased by 0.6 percent in April. This was after a nearly 1 percent drop in March. But, the price of all food stayed the same.
“The index for meats, poultry, fish, and eggs decreased 0.7 percent in April, led by a 7.3-percent decline in the index for eggs. The fruits and vegetables index declined 0.8 percent over the month, and the nonalcoholic beverages index fell 0.2 percent,” the BLS noted. Housing costs rose 5.5 percent year-over-year. They stayed flat for the month. Medical care service costs rose by 0.4 percent in April. This was slower than March’s 0.6 percent rise.
Experts highlight that, despite slower inflation, prices remain high.
“Higher inflation shows that consumers are still losing buying power,” Johnson said to USA Today. Johnson predicts a 3.2 percent COLA increase. It matches this year’s rise. It’s higher than the January estimate of a 1.75 percent increase for 2025.
The exact COLA for next year will be determined in October. Over the past two decades, the COLA has averaged about 2.6 percent, according to MarketWatch.
“Housing takes up about 50 percent of the budget of retired and disabled Americans. So, a 5.5 percent rise in shelter costs is a burden,” Johnson said, according to MarketWatch. “Food prices are still a major sticking point for seniors as well.”
sources consulted:
- https://www.bls.gov/news.release/cpi.nr0.htm
- https://www.newsweek.com/updated-2025-social-security-cola-estimate-released-1901165