4 things you should know to help you plan your housing budget

by Junna Base November 7, 2024

The more you rely on Social Security, the more you need to watch your budget. Since retired workers earn an average of just $1,921.56 in benefits, financing housing can become a major problem unless they have significant additional retirement resources.

Although the annual cost of living update provided by the Social Security Administration can help seniors combat rising costs, it is often not enough to keep up with the actual costs retirees must pay, especially when it comes to housing. But being forewarned is being forearmed. Learning about Social Security’s COLA and projected rent and home prices in 2025 will help retirees better plan their housing budgets. Here’s how.

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Each year, the Social Security Administration adjusts benefit payments based on changes in the CPI-W, the consumer price index for urban wage earners and office workers. Although similar to the widely known Consumer Price Index (CPI), it measures slightly different variables and therefore may differ from the more commonly cited CPI inflation figure.

For 2025, Social Security’s COLA will be 2.5%, smaller than the last three years but larger than any increase from 2013 to 2021. That means the average retiree’s benefits will go from about $1,920 a month to $1,968 US dollar could rise (that’s just 2.5%). an average – not an accurate reflection of the level of performance of all people).

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Each year, the U.S. Department of Housing and Urban Development publishes so-called “market rents” as the basis for various housing programs. But it is also a good forecast for rising rental prices in the coming year.

For 2025, HUD FMRs only increase by 4%, as opposed to increases of 10% in each of 2024 and 2023. Additionally, 99% of areas saw price increases in 2024, while 2025 is estimated to see 20% of them are areas will actually see a decrease in prices. For example, New York’s HUD Metro FMR area will see a 6.3% decline in 2025.

Retirees can use HUD data to prepare for possible rent increases or even consider moving to a more affordable area to increase their housing budget in 2025.