Current:Home > Scams2025 Social Security COLA estimate slips, keeping seniors under pressure -EquityExchange
2025 Social Security COLA estimate slips, keeping seniors under pressure
View
Date:2025-04-12 20:24:28
The latest estimate of Social Security's cost-of-living adjustment (COLA) for 2025 slipped to 2.7% after the government said inflation cooled more than expected in June, new calculations showed Thursday.
In June, the 2025 COLA forecast was 3%.
The consumer price index (CPI), a broad measure of goods and services costs, rose 3% in June from a year earlier, the government said on Thursday. That's down from 3.3% in May and below the 3.1% FactSet consensus forecast from economists. The so-called core rate, which strips out volatile food and energy prices, rose 3.3%, the lowest level since April 2021 and down from 3.4% in May. That was also below predictions for 3.4%.
COLA is based on the "consumer price index for urban wage earners and clerical workers," or CPI-W. That figure fell to 2.9% from May's 3.2% and, is finally below the 3.2% COLA Social Security recipients began receiving in January.
The decline in the estimated 2025 COLA adjustment is likely to be bad news for seniors who continue to grapple with the cumulative effect of high inflation over the past few years and high prices for daily essentials, said Mary Johnson, a retired analyst for the nonprofit Senior Citizens League who tracks and calculates the COLA estimates.
Protect your assets: Best high-yield savings accounts of 2023
Inflation remains the top concern facing retired Americans (89%) in investment firm Schroders' 2024 US Retirement Survey, which was released in May.
"Whether it’s a trip to the gas station, grocery store or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources," said Deb Boyden, head of U.S. Defined Contribution at Schroders.
Daily essentials prices are still rising fast
Items like food, shelter, electricity, hospital and outpatient medical services that seniors spend the most money on continue to outpace the overall rate of inflation, Johnson said.
While overall food prices rose by just 2.2% in June, many of the most frequently consumed proteins rose much more, she said. Beef roasts in June were up 10%, pork chops rose 7.4% and eggs jumped 10.2% from a year ago, government data showed.
At the same time, "our nation’s record-breaking heat means record breaking electrical bills for many Social Security recipients," she said. Annual electricity prices gained 4.4% in June, data showed.
Health problems that required hospital inpatient or outpatient services, as well as care at home have grown roughly three times faster than overall inflation. Year-over-year hospital services increased 7.1% in June and at-home elderly care soared 11.4%, the government said.
Retired and disabled Social Security recipients also spend about half of their household budget on shelter costs, which have grown by 5.4%, Johnson noted.
“Clearly, persistently high prices for key essentials are causing distress for many older and disabled Social Security recipients," Johnson said.
How is COLA calculated?
The Social Security Administration bases its COLA each year on average annual increases in the consumer price index for urban wage earners and clerical workers (CPI-W) from July through September.
The index for urban wage earners largely reflects the broad index the Labor Department releases each month, although it differs slightly. Last month, while the overall consumer price index rose 3%, the index for urban wage earners increased 2.9%.
Social Security taxes:Is Social Security income taxable by the IRS? Here's what you might owe on your benefits
What was 2024's COLA?
Older adults received a 3.2% bump in their Social Security checks at the beginning of the year to help recipients keep pace with inflation. That increased the average retiree benefit by $59 per month.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
veryGood! (242)
Related
- Bodycam footage shows high
- Yes, voter fraud happens. But it’s rare and election offices have safeguards to catch it
- MLB will air local games for Guardians, Brewers and Twins beginning next season
- The Flaming Lips Drummer Steven Drozd’s 16-Year-Old Daughter is Missing
- Trump invites nearly all federal workers to quit now, get paid through September
- Voting systems have been under attack since 2020, but are tested regularly for accuracy and security
- Dancing With the Stars' Gleb Savchenko and Brooks Nader Get Tattoos During PDA-Packed Outing
- Education Pioneer Wealth Society: Heartfelt Education Pioneer, Empowering with Wealth
- Travis Hunter, the 2
- Gun activists say they are aiming to put Massachusetts gun law repeal on 2026 ballot
Ranking
- Gen. Mark Milley's security detail and security clearance revoked, Pentagon says
- Texas is a young state with older elected officials. Some young leaders are trying to change that.
- Is Chris Pine Returning for Princess Diaries 3? He Says...
- Reese Witherspoon and Ryan Phillippe's Daughter Ava Phillippe Reveals How to Pronounce Her Last Name
- IRS recovers $4.7 billion in back taxes and braces for cuts with Trump and GOP in power
- Firefighters still on hand more than a week after start of trash fire in Maine
- 30% Off Color Wow Hair Products for Amazon Prime Day 2024: Best Deals Guide
- 'Avoid spreading false information,' FEMA warns, says agency is 'prepared to respond'
Recommendation
New Zealand official reverses visa refusal for US conservative influencer Candace Owens
In ‘Piece by Piece,’ Pharrell finds Lego fits his life story
New York Jets fire coach Robert Saleh after 2-3 start to season
These October Prime Day Deals 2024 Have Prices Better Than Black Friday & Are up to 90% Off
How to watch the 'Blue Bloods' Season 14 finale: Final episode premiere date, cast
These Amazon Prime Day Sweaters Are Cute, Fall-Ready & Start at $19
Supreme Court declines to hear appeal from Mississippi death row inmate
When do new episodes of 'Outer Banks' come out? Season 4 release date, cast, where to watch