Disappointed in a 2.57% Social Security COLA for 2025? These 3 Numbers Put Next Year's Raise in Perspective.
It's too soon to determine what next year's Social Security COLA is going to amount to. That's because those COLAs are calculated based on third quarter inflation data. And since the third quarter of the year has barely kicked into gear, it's too early to predict a 2025 COLA with a large amount of certainty.
However, there are estimates of next year's Social Security COLA. And a recent one from the Senior Citizens League puts that number at 2.57%.
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A 2.57% COLA might seem like a disappointment at first. But these three numbers should help put that one into perspective.
0%
You may not like the sound of a 2.57% Social Security COLA. But how does a 0% COLA sound to you? Over the past 15 years, there have been three separate instances when Social Security recipients did not see their benefits go up at all from one year to the next. And two of those years were back to back.
Thankfully, those two 0% COLA years followed a year when benefits rose 5.8% But that probably didn't do much to soften the blow.
0.3%
In 2017, Social Security benefits got a measly 0.3% COLA due to minimal inflation. That 0.3% came after a year when there was no COLA at all. And the COLAs that preceded those two years were fairly stingy in their own right, coming in at under 2% for three years in a row.
2.75%
This is the average Social Security COLA beneficiaries have gotten over the past 10 years. It accounts for a 0% COLA year, but it also accounts for 2023's whopping 8.7% COLA that came on the heels of rampant inflation. When we compare that average of 2.75% to 2.57%, the most recent COLA projection for 2025, we can see that there's not such a big discrepancy.
Why seniors shouldn't be too reliant on Social Security COLAs
While a 2.57% COLA in 2025 may not be so terrible -- if that even ends up being the final number -- the reality is that it's best that seniors not be in a position where they're heavily dependent on Social Security COLAs to make ends meet. Clearly, COLAs can be inconsistent. And even when they're fairly generous, they have a history of doing a poor job of helping seniors maintain their buying power in the face of inflation.
If you're still working and aren't yet on Social Security, make every effort possible to try to boost your savings before your career comes to a close. That way, you be may less likely to panic if there's a year when your Social Security benefits don't increase, or if that increase is so minuscule you barely even notice it.
And if it's early on in your career, take action by getting into the habit of making automatic contributions to a retirement plan every month. If you go that route, you might end up in the very favorable situation of not having to rely much on Social Security at all.The $22,924 Social Security bonus most retirees completely overlook
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