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## Social Security Cost-of-Living Adjustment Estimates for 2025

Next yearÔÇÖs Social Security cost-of-living adjustment (COLA) is predicted to be lower than the increase seniors received in 2024 due to declining inflation rates. The Senior Citizens League and the Congressional Budget Office both estimate a 2.4% to 2.5% increase in Social Security benefits for 2025. This is a decrease from the 3.2% bump in 2024.

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## Inflation Trends and Impact on COLA

Despite persistent inflation pressures, economists anticipate a slowdown in inflation through 2024, affecting the calculation of the next COLA adjustment by the Social Security Administration. This could further strain the finances of over 70 million retired seniors and disabled workers, especially considering the ongoing rise in essential expenses like shelter, medical care, and transportation.

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## The Calculation Process for COLA

The COLA adjustment is based on inflation data from the third quarter of the year, with the final announcement expected in mid-October. While predictions suggest a 2% to 3% increase in COLA for 2025, uncertainties remain, especially regarding the persistence of high inflation rates.

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## Challenges Faced by Social Security Beneficiaries

The disparity between COLA adjustments and rising costs poses challenges for seniors, with many struggling to keep up with expenses exceeding the overall inflation rate. Moreover, the tax implications of high COLA adjustments in 2023 could affect beneficiaries, leading to potential tax liabilities on their Social Security benefits.

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## Future Concerns for Social Security

With projections indicating Social Security reserves may deplete by 2033, concerns arise regarding the program’s sustainability and its implications for retirees heavily reliant on these benefits. Staying informed and prepared for potential changes is crucial for individuals planning their retirement income strategy.

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