Next year’s Social Security cost-of-living-adjustment — or soda pop — might be 2.4%, a boost from a previous projection.
The brand-new forecast, which originates from advocacy group The Senior Citizens League, is based upon February customer rate index information launched Tuesday by the U.S. Bureau of Labor Statistics. In January, the company approximated the 2025 soda pop would be 1.75%.
But inflation inched up a bit from January to February. The customer rate index for city wage earners and clerical employees (or CPI-W) — a subset of the CPI that’s utilized to determine the soda pop — was available in at 3.1% for the month of February, resulting in this a little greater soda pop quote.
What is the soda pop, and how is it determined?
Every year, the Social Security Administration increases advantages for its approximately 70 million receivers to bring their payments up to speed with inflation. Using information from the CPI-W, the boost is based upon the typical inflation for the 3rd quarter of the year, which covers July, August and September.
The average is then compared to that of the previous year, and the distinction is the soda pop. For 2024, the soda pop was 3.2%, which increased the typical senior citizen advantage by $59 a month, according to the Social Security Administration.
The common Social Security payment for a retired individual is $1,907.
Costs are increasing for older Americans
While inflation has actually cooled substantially from its 9.1% peak in the summer season of 2022, February’s customer rate index for all city customers reveals that it’s still above the Federal Reserve’s target 2% rate. The CPI-U increased 0.4% in February after ticking up 0.3% the previous month, mainly due to boosts in the expense of shelter and fuel, according to the Bureau of Labor Statistics.
Mary Johnson, policy expert for The Senior Citizens League, states specific costs borne by older grownups have actually continued to increase.
“Shelter, medical and transportation prices remain higher than overall inflation rate,” she states in an e-mail.
A January study from The Senior Citizens League reveals that this year’s soda pop isn’t always assisting older Americans stay up to date with inflation. Ninety-3 percent of participants stated their home costs increased in 2023 by more than $59 a month, indicating their expenses are likely now exceeding their raise. Forty-3 percent of participants stated their costs leapt more than $185 monthly in 2015.
The SODA for 2025 is set to be revealed in October.
More from Money:
When Social Security Recipients Will Get Their Checks in March
This Social Security Quiz Stumps Over 40% of People Nearing Retirement
A New Bill Aims to Fix Social Security by Eliminating Taxes on Benefits
