Retirees don't get the same monthly Social Security check forever. If they did, they would lose a lot of their buying power as prices for goods and services rise over time. To ensure seniors get extra money to cope with those rising costs, periodic cost-of-living adjustments (COLAs) are built into the program.
In 2024, for example, Social Security recipients received a 3.2% benefits increase. This was down from the 8.7% raise the year prior but still pretty high relative to raises in recent years.
Retirees are likely to get another raise in 2025. And if you're a senior, you may be wondering how much extra money you'll get. The experts have a prediction, which can help you to understand what's coming in the new year.
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Here's what the experts predict for the 2025 Social Security raise
According to the Senior Citizens League, a large nonpartisan senior group, retirees will most likely see a 2.6% COLA in 2025. This is lower than last year but higher than the organization had predicted in February when experts suggested seniors were in line for a 1.8% raise next year.
The Senior Citizens League modified its forecast as a result of recent economic data. Specifically, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) showed a year-over-year increase of 3.5% in March. This was higher than expected.
CPI-W measures how spending on a basket of goods and services changes over time. It's also the metric the COLA formula is tied to. Under the Social Security rules, retirees receive a raise equal to the annual percent increase in the third-quarter CPI-W.
Of course, no data for the relevant months of July, August, and September is available yet. But the CPI numbers from January through March provide a guide for how things are trending, and they suggest prices are still climbing.
What does this 2.6% benefits increase mean for retirees?
If the prediction pans out from the Senior Citizens League and retirees see their Social Security checks go up 2.6% next year, the average benefits recipient will get about $45 more per month. However, some of this increase will likely be offset by a raise in Medicare premiums, which are normally withdrawn directly from Social Security payments.
Retirees may be disappointed getting a smaller COLA in 2025 compared to 2023 and 2024. However, it's important to remember the COLA is tied to inflation. These annual raises aren't intended to give seniors more buying power but to keep it in line with rising prices. Unfortunately, the CPI-W is an imperfect metric, and the Senior Citizens League believes retirees have indeed seen the long-term buying power of their Social Security benefits decline over time.
Nothing is set in stone, and there's time left before the relevant CPI-W data arrives. Still, Social Security recipients should be prepared for next year's COLA to come in lower than what they've seen in 2023 and 2024.
