If you're curious to know what 2025's Social Security cost-of-living adjustment (COLA) will look like, you're in good company. But unfortunately, that information will not become available until October. That's because COLAs are calculated based on inflation data from the third quarter of the year. Since we're only about halfway through Q3, it's too soon to have a definitive number.
However, there are estimates out there based on the inflation data we have so far. The nonpartisan Senior Citizens League projects that 2025's Social Security COLA will amount to 2.57%. That's a notable drop from the 3.2% COLA Social Security beneficiaries received at the start of 2024.
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If you're worried that next year's Social Security COLA will fall short for you, now's the time to take action, rather than sitting back and waiting for your monthly benefit to barely go up. Here are some steps worth taking.
1. Rethink your spending
Many Social Security beneficiaries live modest lifestyles and limit themselves to basic expenses. You might think you're doing the same. But when's the last time you did a deep dive into your spending?
If you go through that exercise, you may find that there are one or two bills you can reduce modestly. That could mean downgrading a cable plan or shopping around for homeowners insurance to lower your premium rates.
2. Relocate somewhere less expensive
Social Security doesn't adjust its monthly benefits based on local living costs. Whether you live in one of the most expensive areas of the country or one of the cheapest, your monthly benefit stays the same (though the state you live in could determine whether you pay any state taxes on your Social Security benefits).
In light of that, it pays to look at options for relocating if there's an area that would allow you to stretch that money further. But don't just look at housing costs. Look at factors like state income taxes, sales tax, and more. Also, make sure that wherever you go, you have access to decent healthcare, since that's an important thing to have during retirement.
3. Join the gig economy
The gig economy isn't just for millennials and Gen Zers. If you could use more retirement income, especially in anticipation of a small Social Security COLA next year, it pays to explore your options for earning extra cash while potentially doing something enjoyable (or at least tolerable).
If you've always played an instrument on the side, you could offer piano or guitar lessons out of your home. If you love animals, pet-sitting services are often in high demand. And if you're a former educator, you could try your hand at tutoring.
These are only a few examples. But earning a few hundred dollars a month might give you a nice amount of breathing room and alleviate some of your financial stress.
Social Security's upcoming COLA won't be announced officially for quite some time. But don't wait until October to hear that number and start panicking. Instead, take action now so that you can set yourself up for a more financially sound 2025.
