4 things to know so you can plan your housing budget

On By Littum

The more you rely on Social Security, the more you’ll need be aware of your budget. With retired workers earning just $1,921.56 in average monthly benefits, housing affordability can become a major concern unless they have significant additional retirement resources.

While the annual cost-of-living update provided by the Social Security Administration can help seniors combat rising costs, it’s often not enough to keep up with the actual expenses retirees must pay, especially when it comes to housing. But being warned is forewarned. Learning about the Social Security COLA and expected rent and housing prices in 2025 can help retirees better plan their housing budgets. This is how you do it.

Find out: 2 changes are coming to social security in 2025

Read next: 5 Subtle Genius Moves All Wealthy People Make With Their Money

Trending now:

The Social Security Administration adjusts daily allowance payments every year based on changes in the CPI-W, which is the consumer price index for wage earners and office workers in the cities. Although it is similar to the commonly known Consumer Price Index, or CPI, it measures slightly different variables and therefore may differ from the more commonly quoted CPI inflation figure.

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

To you: 8 States to Move to If You Don’t Want to Pay Taxes on Social Security

Each year, the US Department of Housing and Urban Development releases so-called “fair market rentals” as a starting point for various housing programs. But it is also a good projection of increases in rental prices for the coming year.

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

Retirees can use HUD data to prepare for any potential rent price increases or even consider moving to a less expensive area to stretch their housing budgets in 2025.