The (Stressing) Social Security Increase Game

Every October, the Social Security Administration (SSA) announces the Cost of Living Adjustment (COLA) percent to be added to  recipient's current benefit for the upcoming year. It is based on the Consumer Price Index for Wage Earners (CPI-W) as of September 30, which is the end of the Federal fiscal year.

The COLA ensures that the purchasing power of Social Security benefits is not eroded by inflation. 

 

These are the last five years’ adjustments prior to today:

     - 2020 – 1.3%

     - 2021 – 1.3%

     - 2022 – 5.9%

     - 2023 – 8.7%

     - 2024 – 3.2%

It is anticipated that the adjustment for 2025 will be 2.5%, which would be an increase from $1,920 per month to approximately $1,968, providing an average $48 monthly boost.

But then, some of that increase will be taken to cover the increase to the Part B Medicare insurance premium. It has not yet been anticipated what the increase might be. Last year, the increase was approximately $10 from $164 to $174 per month.

The increase for 2025 will be announced on Thursday, October 10. The Medicare increase will be announced later this year.

For several years, many lobby groups, like AARP and the Senior Cituzen League, have pushed for the SSA to use the Consumer Price Index for the Elderly (CPI-E). This would reflect a higher percentage increase to more properly reflect the higher cost of living expenses that senior citizens have faced over the last several years.

The CPI-E is a measure of inflation that considers the spending habits of people aged 62 and older. It’s usually higher than the CPI-W because it’s weighted more heavily toward health care expenses.

In addition, some advocates want the CPI-E to be used to calculate the Cost-of-Living Adjustment (COLA) for Social Security. The Social Security Expansion Act, introduced in February 2023, would require the use of the CPI-E for Social Security COLA.

While the CPI-W will be the guideline for this year, perhaps CPI-E will be used going forward. We can hope, as medical costs continue to skyrocket.

The mystery and suspense for the next increase will be revealed on Thursday.