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COLA Watch–2025 Edition
Continuation of the recent trend in CPI numbers has led forecasters to suggest that the 2025 Social Security COLA could fall into the 2.57% to 3% range, according to a post by Ted Godbout on the National Association of Plan Advisors website. Of course, we’re still months away from the third quarter measurement, but the numbers are trending downward from the 2024 COLA of 3.2%. Read Godbout’s napa-net.org post here.
Given the variety of unknowns in today’s economy (it is an election year, after all), it’s good to look at early projections as simple guesses. The size of the adjustment fluctuates with economic cycles, and has ranged from a high of 14.3 percent in 1980 to 0.3% in 2017 (excluding, of course, the zero years). Here’s a historical look-see at how the adjustments occurred since 1974, just to show you the cycles in action. The historical average for these 49 years, incidentally, was 3.8 percent, so the 2024 adjustment of 3.2% wasn’t that far from the average.
We’ll keep you posted as new projections are announced, but it’s important to remember that the actual calculation compares third quarter CPI-W data to the same period of the preceding year. There’s a lot that can happen with CPI between now and the July-September period.