The latest estimate of Social Security's cost-of-living adjustment for 2025 rose to 3.2% after the government reported that April inflation was in line with economists' forecasts, new calculations showed Wednesday.
The 2025 COLA estimate has risen all year as inflation remains elevated and above the Federal Reserve's 2% target. It stood at 1.75% in January, 2.4% in February, and 3% in March.
Social Security's 2025 COLA estimate inches up but Medicare Part B premium may wipe it out
Medora Lee
USA TODAY
The latest estimate of Social Security's cost-of-living adjustment for 2025 rose to 3.2% after the government reported that April inflation was in line with economists' forecasts, new calculations showed Wednesday.
The 2025 COLA estimate has risen all year as inflation remains elevated and above the Federal Reserve's 2% target. It stood at 1.75% in January, 2.4% in February, and 3% in March.
Overall prices increased 3.4% from a year earlier, down from 3.5% in March, according to the Labor Department’s consumer price index, a gauge of goods and services costs throughout the economy. On a monthly basis, costs rose 0.3%, below the 0.4% rise the previous month.
COLA is based on the "consumer price index for urban wage earners and clerical workers," or CPI-W. That figure dipped to 3.4% from March's 3.5% but still outpaced the 3.2% COLA Social Security recipients began receiving in January. CPI-W excludes the spending patterns of retired and disabled adults, most of whom receive Medicare benefits.
"The higher inflation indicates that consumers are still experiencing an erosion in buying power," said Mary Johnson, a retired Social Security and Medicare policy analyst for the nonprofit Senior Citizens League, who still tracks the data.
Items on which seniors spend the most money increased significantly over the past year: Hospital services rose 7.7%; transportation services soared 11.2%; shelter jumped 5.5%; and electricity climbed 5.1%, the government said.
