COLA 2024-2025: A Comprehensive Guide
I. Cost-of-Living Adjustment (COLA) for 2024 and 2025
The annual Cost-of-Living Adjustment (COLA) is a crucial financial lifeline for retirees, military personnel, and other individuals who rely on fixed incomes. The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of everyday items.
A. Notable Increase in Index Determining COLA
Good news for COLA recipients! The CPI-W has seen a significant jump in recent months, leading to a potentially higher COLA adjustment for 2024 compared to previous years. This increase is primarily driven by rising energy and food costs.
B. Potential Higher Adjustment for Retirees Compared to 2023
Retirees receiving Social Security benefits may see a slightly higher COLA adjustment in 2024 than they did in 2023. This is because the CPI-W has risen at a faster pace in recent months than the CPI for Urban Consumers (CPI-U), which is used to calculate Social Security COLA.
C. Estimated 2.6% Increase for 2025, Aligning with the Decade’s Average
While the official COLA adjustment for 2025 has not yet been announced, experts predict it will be around 2.6%. This is in line with the average COLA increase over the past decade.
COLA for 2024 and 2025: What You Need to Know
V. 2025 Social Security COLA
The official announcement for the 2025 Social Security COLA is expected in October. Speculations suggest a 2.6% increase, lower than the 3.2% in 2023. However, the possibility of using the Consumer Price Index for the Elderly (CPI-E) could result in a slight increase. Years of advocacy for this change have yet to see government action.
Conclusion
COLA adjustments are crucial for maintaining the purchasing power of fixed-income earners, particularly military retirees and VA disability recipients. While concerns about COLA reduction or elimination persist, organizations like MOAA continue to advocate for its protection. Potential changes to COLA calculation, such as altering the CPI, should be closely monitored. It’s important to stay informed about official announcements and track COLA figures from reputable sources. Remember, COLA plays a significant role in ensuring the financial well-being of those who have served our country and those who rely on fixed incomes.