CNS News– A Major Nonpartisan Advocacy group says that in the coming years, senior citizens across the U.S. will see their annual COLA increase drop by almost two percent. The Senior Citizens League (SSL) thinks that the 2025 Cost of Living Adjustment (COLA) will be 1.75 percent based on the January Consumer Price Index (CPI) report that came out on Tuesday.
Some people may not like the change yet, but it will affect everyone who gets pensions or other welfare payments from the Social Security Administration. A new rate is given every year for COLA, which is the rate at which Social Security benefits are raised to keep up with inflation. The amount it goes up depends on how much the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) goes up. It was mentioned that this was 2.9% in January.
Inflation rates in the third quarter of this year—July, August, and September 2024—will be used to figure out the new COLA rate for 2025. The SSL prediction is less than what the Congressional Budget Office (CBO) said would happen. The CBO thinks that COLA will be 2.5%. The SSL stated in a news release on February 13 that “The CBO uses a different methodology than TSCL’s, but clearly, inflation rates are expected to fall from 2023 levels, and the COLA for 2025 will also be lower.”
Social Security COLA 2025 update as seniors given grim news https://t.co/LVXPiIchun pic.twitter.com/Biwvb1bM38
— Newsweek (@Newsweek) February 14, 2024
Newsweek emailed the SSL to get more information outside of usual business hours. Even though there isn’t an official rate for 2025 yet, TSCL’s Social Security and Medicare policy expert, Mary Johnson, has said that future predictions could be higher or lower than what was thought in January.
Her estimates change every month based on the most up-to-date CPI statistics, she told USA Today. “We still have eight months of data to come in and a lot could change.” The estimates made now are a long way below the official COLA rate from the past few years. Due to high inflation, the COLA went up 8.7 percent in 2023, which was the biggest increase in 40 years.
The COLA for this year is set at 3.2%. NBC News says this means that the average monthly retirement benefit will go up by $59 in 2024, from $1,848 to $1,907, which is the rise. The increase was good for people who get Social Security because living costs are going up.
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However, because of the 8.7 percent increase in 2023, some people may now be in a higher tax rate if they have extra money from a job or some other source. You usually don’t have to file a tax return if your only source of income is Social Security benefits. This means you don’t have to pay taxes on your benefits.