Social Security 2025 COLA Estimate Climbs to 3%

The Senior Citizens League estimates the Social Security cost-of-living adjustment, or COLA, for 2025 is likely to be between 2.6% and 3%, based on the latest consumer price index data, released Wednesday.

The 2024 cost-of-living adjustment for Social Security beneficiaries was 3.2%.

The March Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 3.5% from 12 months ago, higher than the annual rate measured in February, according to the advocacy group. As a result, the League’s 2025 COLA projection increased again after jumping from 1.75% to 2.4% last month.

In the league’s 2024 Senior Survey, 73% of respondents said their household costs rose by more than 3.2% in 2023; in addition, 38% are worried that their 2024 COLA will fall short of inflation this year.

The group cautions that the final COLA for 2025 is “likely to be different from the estimates because the COLA is calculated on the average rate of inflation during the third quarter … which is compared against the third quarter a year ago.”

March Inflation Highlights

As reported by the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers — a broader measure of inflation than the CPI-W — increased 0.4% in March on a seasonally adjusted basis. This was the same as the monthly increase seen in February. Over the last 12 months, the all-items index increased 3.5% before seasonal adjustment.

The index for shelter rose in March, as did the index for gasoline. Combined, these two indexes contributed more than half of the monthly increase in the index for all items. The energy index rose 1.1% over the month, while the food index increased only 0.1%. The food-at-home index in March was unchanged, but the food-away-from-home index rose 0.3% over the month.

The index for all items less food and energy rose 0.4% in March, as it did in the two preceding months. Other indexes that saw increases in March include shelter, motor vehicle insurance, medical care, apparel and personal care. The indexes for used cars and trucks, recreation and new vehicles were among those that decreased over the month.

Credit: David Palmer/ALM