2025 COLA Update: What July's CPI Numbers Mean for Your Social Security Benefits

Introduction: Hey, thanks for making it to Veterans Infot. I'm glad you made it! The CPI numbers are in for July, marking the first month used to calculate our COLA (Cost of Living Adjustment). Typically, we see an increase rather than a zero, which effectively raises our pay connected to the COLA, such as Social Security or VA benefits.

Current CPI Data: With the release of July's numbers on August 14th, we now have the data for July and need to wait for August and September figures to calculate the COLA. The latest CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) is 3.38501, which is 2.4% above the fiscal year 2024 baseline of 301.236. August 2024 figures will be announced on September 11th.

Projection for 2025 COLA: Let's dive into an article from Think Advisor. The projection for the Social Security COLA in 2025 is likely to be 2.6%. This projection has dropped from earlier estimates which reached up to 3%. The 2.6% projection is expected to be about average for the past two decades and the lowest since 2021.

Detailed Analysis: Mary Johnson, an independent Social Security expert, provides this estimate. The 2024 COLA for Social Security beneficiaries was 3.2%. The CPI-W rose 2.9% in July from a year ago. While there have been discussions about changing the COLA calculation method to the CPI-E (Consumer Price Index for the Elderly), which might have resulted in higher adjustments historically, there is no current movement in that direction.

Future Considerations: There are ongoing discussions about potential adjustments to how COLA is calculated, such as considering a CPI-W plus additional percentages. Another idea is for the VA to calculate its own COLA adjustments for educational programs, as they have historically trended higher.

Inflation Highlights for July: According to the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (a broader measure of inflation) increased by 2% in July. The all-items index rose 2.9% over the past 12 months, the smallest 12-month increase since March 2021. Notably, the index for shelter rose 0.4% in July, accounting for nearly 90% of the monthly increase in the all-items index.

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