Social Security Retirees in 2025 Are Looking at Their Smallest Raise in 4 Years
The U.S. Bureau of Labor Statistics recently released inflation data for August. The numbers were roughly in line with expectations and continue to suggest that retirees are looking at a smaller raise to their Social Security benefits in 2025 compared to recent years. At this rate, retirees may soon see the smallest raise to their benefits since 2021. This comes after surging inflation resulted in some of the biggest increases to Social Security benefits in decades. Let's take a look at where things stand.
Each year, there is a cost-of-living-adjustment (COLA) to Social Security benefits. The goal is to make sure the purchasing power of benefits keeps pace with inflation, although some would argue the current methodology for calculating the COLA has fallen short of this goal.
The Social Security Administration (SSA) calculates the COLA by looking at data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the price changes on a market basket of goods and services. Specifically, the SSA looks at the CPI-W during the third quarter of the year, which includes the months of July, August, and September, and compares it to the readings from those months a year prior. For example, 2024's 3.2% COLA was calculated using the average quarterly CPI-W figures below.
Source Fool.com
