(CNN Spanish) – Every year, millions of Social Security beneficiaries in the United States wait until October to find out how much their payments will increase under this scheme.
The US Social Security Administration (SSA) is responsible for publishing the COLA in October, an acronym that refers to the annual cost-of-living adjustment (from the English cost of living adjustment) and through which the increase in payments for Social Security beneficiaries is determined.
By 2024, the adjustment in Social Security payments was 3.2%an increase that has been criticized because it remained below inflation, making it more difficult for beneficiaries to keep up with rising prices with the money granted.
In fact, over the past five years, only the 2023 adjustment has outpaced the inflation rate, according to advocacy group The Senior Citizens League. That year, the COLA was 8.7% amid a backdrop of very high inflation in the country.
Annual adjustments are based on the percentage change in an average inflation index for the third quarter of the current year compared to the same period of the previous year.
The 2025 increase will be announced in October, but is expected to be 2.6% based on inflation rates through June, said Shannon Benton, executive director of The Senior Citizens League. (As noted, this forecast is subject to change, as the inflation rates used in the calculation are for the July-September quarter.)
If the 2.6 percent increase goes ahead, it won’t be enough to keep up with the actual expenses of many seniors, especially since the deficit builds up when previous adjustments don’t cover price increases shown by inflation, Benton said.
“We’re hearing that household costs rose faster than the COLA last year, with food and housing leading the way,” he said, adding that some seniors are being forced to spend down their retirement savings at a faster pace and take on credit card debt.
To put that into perspective, that 2.6% increase is almost in line with the latest available US inflation data, which in July came in at 2.5% on an annualized basis, better than the previous estimate of 2.9% but still far from the Federal Reserve’s 2% target. Still, it is the first time since March 2021 that US inflation has fallen below 3%.
–With reporting by CNN’s Tami Luhby, Alicia Wallace and Patricia Kaplan.
