The projected cost-of-living adjustment (COLA) for Social Security recipients in 2025 has dropped further, according to the latest inflation data from the Bureau of Labor Statistics.
Based on the Consumer Price Index (CPI) through August, the Senior Citizens League (TSCL), a nonpartisan advocacy group, now estimates a 2.5% increase in benefits for next year. This is lower than previous estimates of 2.63% in July and 2.57% in August, marking the lowest COLA increase since 2021.
A 2.5% COLA would raise the average monthly benefit for retired workers by approximately $48, bringing the average payment to $1,968. These yearly adjustments are intended to help Social Security and Supplemental Security Income (SSI) recipients maintain their purchasing power as inflation impacts everyday expenses.
The official COLA for 2025 will be determined by the Social Security Administration (SSA) in mid-October, based on inflation data from the third quarter (July to September). If inflation remains steady, beneficiaries can expect to see the adjusted payments in January.
Social Security COLAs have fluctuated in recent years, driven by changes in inflation. In 2023, recipients saw a significant 8.7% increase due to record-high inflation, while the 2024 adjustment dropped to 3.2%. With inflation continuing to cool, the projected 2.5% for 2025 reflects a return to the historical average, which has been around 2.6% over the last two decades.
However, many seniors feel that these adjustments fail to cover the rising costs of essentials such as housing, medication, and food. In a survey by TSCL, 69% of participants reported that their household expenses outpaced last year’s 3.2% increase, leading to concerns that the COLA is not adequately addressing seniors’ needs.
While the projected 2025 increase may be modest compared to recent years, it is still in line with historical norms. The Senior Citizens League has called for a minimum COLA of 3% to better support retirees who rely on Social Security, particularly as Medicare Part B premiums, which cover physician and outpatient services, continue to rise faster than COLA adjustments. According to a new analysis, premiums have increased by 5.5% annually on average, outpacing Social Security adjustments, and putting further strain on beneficiaries’ incomes.
The final decision on the 2025 COLA will come in October, once the Social Security Administration reviews the final inflation figures for the third quarter. While the current 2.5% estimate could change slightly, it remains a clear signal of the ongoing challenges seniors face in balancing rising living costs with limited income growth.
