Experts calculate the COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a metric measuring inflation.
Since COLA calculations are tied to the CPI-W data from July to September of the previous year, economic issues during these months can mean unpredictable adjustments.
In 2024, the COLA is at 3.2%, but many retirees apparently feel this isn't enough to keep up with their expenses. According to the Senior Citizens League, this adjustment falls short of many retirees’ needs.
Although the COLA adjusts downward, the latest inflation rates are 3.5%. The gap between the two could mean that retirees struggle to cover everyday costs more.
Critics argue that other measures, such as the Consumer Price Index for the Elderly (CPI-E), could better understand retirees' cost increases.
Thanks to all the variables involved, accurate COLA forecasts are difficult to make like any economic predictions.
Over the last few years, COLA has increased quite a bit due to rising inflation. After these bigger increases, the expected lower adjustment in 2025 might feel particularly inadequate for retirees.
In 2025, the Social Security Administration (SSA) will expand access to the Supplemental Security Income (SSI) program.
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