The more you depend on social security, the more you have to take your budget into account. Because retired workers earn an average of just $1,921.56 in monthly benefits, paying for housing can become a major concern unless they have significant additional retirement resources.

While the Social Security Administration’s annual cost of living update can help seniors combat rising costs, it is often not enough to track the actual expenses retirees must pay, especially when it comes to housing. But being forewarned is like having both feet on the ground. By learning more about Social Security’s COLA and projected rent and home prices in 2025, retirees can better plan their housing budgets. Here’s how.

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Each year, the Social Security Administration adjusts benefits based on changes in the CPI-W, the consumer price index for urban wage earners and white-collar workers. Although it is similar to the commonly known consumer price index (CPI), it measures slightly different variables and thus may differ from the more commonly cited CPI inflation figure.

For 2025, the Social Security COLA will be 2.5%, smaller than the past three years but larger than any increase between 2013 and 2021. This means the average retired worker could see their benefits increase by about $1,920 per month to $1,968 (this is just an average – not an accurate reflection of everyone’s benefit amount).

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Each year, the U.S. Department of Housing and Urban Development releases so-called “fair market rents” as the basis for various housing programs. But it is also a good projection of rent increases for the coming year.

For 2025, HUD FMRs will increase by only 4%, as opposed to gains of 10% each in 2024 and 2023. Additionally, in 2024, 99% of areas showed a price increase, while in 2025 an estimated 20% of areas will actually show a price drop. For example, the New York HUD Metro FMR area will see a 6.3% decline in 2025.

Retirees can use HUD data to prepare for potential rent increases or even consider moving to a cheaper area to stretch their housing budget in 2025.

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