What's Happening
2 hours ago

Mark Zuckerberg Follows Elon Musk's Footsteps As Meta Reportedly Plans Major Investment Into AI-Powered Humanoid Robots

benzingabenzinga.com
2 hours ago

Do You Know How Long $1 Million Will Last If You Retire At 65? Here's A Hint – Longer Than You're Led To Think!

benzingabenzinga.com
2 hours ago

IRS Reportedly Gears Up To Lay Off Thousands Of Workers Elon Musk's DOGE Looks To Shrink The Tax Agency

benzingabenzinga.com
3 hours ago

TRADEPULSE POWER INFLOW ALERT: PALO ALTO NETWORKS INC. (PANW) MOVES UP OVER 5% AT ITS HIGH AFTER TRADEPULSE ALERT

benzingabenzinga.com
4 hours ago

Jeff Bezos-Backed Anthropic Fights US Proposal Blocking Google From Investing In AI Startups, Says It Would Benefit Rivals OpenAI, Mark Zuckerberg's M...

benzingabenzinga.com
5 hours ago

Trump Administration 'Unlikely' To Support TSMC's Control Of Intel's US Chip Factories: Report

benzingabenzinga.com
5 hours ago

Trump's 'Liquid Gold' Plan: Can He Really Make America Rich Again, or Do Oil Giants Hold the Real Power?

benzingabenzinga.com
6 hours ago

Elon Musk's Government Gig Has No Salary, No Job Title, And Plenty of Power

benzingabenzinga.com
7 hours ago

Russell Vought Orders Pause On All CFPB Activity, Critics Say This Gives Corporations 'The Green Light To Scam Families'

benzingabenzinga.com
7 hours ago

$1000 Invested In Super Micro Computer 15 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
7 hours ago

'We're Going To Find Billions' – Trump Targets Pentagon For Deep Spending Cuts

benzingabenzinga.com
7 hours ago

Here's How Much You Would Have Made Owning Meta Platforms Stock In The Last 10 Years

benzingabenzinga.com
8 hours ago

If You Invested $1000 In This Stock 15 Years Ago, You Would Have This Much Today

benzingabenzinga.com
8 hours ago

Here's How Much You Would Have Made Owning Regeneron Pharmaceuticals Stock In The Last 15 Years

benzingabenzinga.com
8 hours ago

Here's How Much You Would Have Made Owning American Tower Stock In The Last 20 Years

benzingabenzinga.com
8 hours ago

$100 Invested In Cencora 5 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
9 hours ago

Here's How Much $1000 Invested In FTAI Aviation 5 Years Ago Would Be Worth Today

benzingabenzinga.com
9 hours ago

5 Stocks That Could Suffer With Canadian Tariffs

benzingabenzinga.com
9 hours ago

Vontier Stock: A Deep Dive Into Analyst Perspectives (5 Ratings)

benzingabenzinga.com
9 hours ago

4 Analysts Have This To Say About Palomar Hldgs

benzingabenzinga.com

Social Security Retirees Should Be Paying Attention to 1 Number in 2025

With another year in the books, Social Security retirees will look ahead to 2025. Retirees will receive a 2.5% cost-of-living adjustment (COLA), the smallest in four years because inflation declined this year. The average Social Security benefit for retired workers in November was roughly $1,925 per month, or $23,105 annually. The COLA increase will lift the average monthly benefit to roughly $1,974, or $23,683 annually. Now that retirees know their benefits for 2025, they can map out their budgets for the upcoming year and start thinking about future benefits. Here’s the one number Social Security retirees should pay attention to in 2025.

The 2026 COLA

2026 may seem far away, but the next year’s benefits are always determined the year before, specifically in the third quarter during July, August, and September. Social Security COLAs are intended to help retirees keep pace with inflation, so the Social Security Administration (SSA) uses inflation data from those three months to determine the following year’s COLA.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

The Consumer Price Index, which tracks the price changes on a basket of consumer goods and services, is the mainstream inflation gauge. However, the market focuses on the Consumer Price Index for All Urban Consumers (CPI-U), while the SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA. Some argue that the CPI-W doesn’t fully capture the spending habits of the mainly older population that claims benefits, but the SSA by law must use the CPI-W when calculating the new COLA. The CPI-U and CPI-W largely move in the same direction.

To calculate the following year’s COLA, the SSA looks at the year-over-year change in the CPI-W in the third quarter of the year; the agency takes the year-over-year change in July, August, and September and averages them together to arrive at the next year’s COLA. Retirees will want to pay attention to the CPI throughout the year to know how the 2026 COLA is shaping up. Early-year trends on inflation should offer clues as to how the CPI-W will trend later in the year.

Person on laptop.

Image source: Getty Images.

Inflation could go either way

The sooner retirees have a better idea of next year’s COLA, the sooner they can begin budgeting, whether that means saving a little extra each month if possible or realizing they may have a little extra cash to work with.

It’s hard to know exactly in which direction inflation will go, making this year particularly interesting. The CPI-W has risen about 2.7% in the first 11 months of 2024, compared to a 3.3% increase in all of 2023. While many think inflation will continue to come down toward the Federal Reserve’s preferred 2% target, others aren’t so sure. The labor market still looks strong and inflation has increased at a steady clip for most of the second half of the year. After the Fed’s final meeting of the year, Fed Chair Jerome Powell said the agency will proceed cautiously on future rate cuts, given inflation trends seen in recent months. Some worry that President-elect Donald Trump’s proposed policies like tax cuts and tariffs may re-ignite inflation, while others wonder if the Fed moved too early with rate cuts. Economists have recently hiked their estimates for inflation in 2025.

Higher inflation would likely lead to a higher COLA in 2026, but it’s a bit of a double-edged sword because higher inflation also means higher consumer prices. Various studies have shown that Social Security benefits have not kept pace with inflation, so some retirees may root for a smaller COLA if it means falling consumer prices. Consumer sentiment can also drive inflation because consumers may adjust their spending habits based on what they think will happen. That’s why the CPI-W merits attention next year.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

Social Security is an essential piece to most American’s retirement plans. Without their monthly benefits, some 16.3 million seniors U.S, would be living below the

The average retirement age in the U.S. was 62 in 2023, but that number’s been slowly ticking up over time. Rising life expectancies and rising

While the stock market is still thriving, some investors may be feeling wary about the future. Spiking inflation could cause the Federal Reserve to shift

There are plenty of ways to become a millionaire, like starting a successful business, being a professional athlete, or becoming a movie star. For most