The annual cost-of-living adjustment (COLA) for Social Security for 2025 is projected to be the smallest since 2021 amid cooling inflation.
The annual COLA, which boosts beneficiaries' monthly benefits to account for inflation, is determined using the average inflation rate over July, August and September in comparison to the prior year as measured by the Labor Department's Bureau of Labor Statistics (BLS) in its monthly consumer price index (CPI) reports.
An estimate by The Senior Citizens League (TSCL) projects that based on its projection of September's inflation, which will be announced by the Labor Department next month, the COLA for 2025 will be 2.5%. Inflation fell to 2.5% year over year through August.
TCSL said that would boost the average monthly Social Security benefit of $1,920 by an additional $48. The updated benefit amount would take effect with the first distributions of Social Security checks in January 2025.
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The 2.5% COLA would be less than the 3.2% adjustment that Social Security recipients got for 2024, but would be roughly in line with the historical norm – as it's averaged 2.6% over the last 20 years.
"Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%," said Shannon Benton, executive director of TSCL. "TSCL research shows that approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely."
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TSCL noted the cost of living challenges facing older Americans and cited findings from its 2024 Retirement Survey that found 65% of seniors had monthly expenses of at least $2,000 – an increase from 55% in 2023.
That survey found that more seniors are spending at least $4,000 or $6,000 per month compared to 2023, while fewer were able to get by on $1,000 or less.
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Additionally, it found that nearly 80% of senior households in the survey said their monthly budget for essential items has increased in the last 12 months, with 63% saying they're worried their income won't be enough to cover basic costs in the months ahead.
The Social Security Administration (SSA) will announce the official COLA for 2025 in mid-October after the September inflation data is released by the Labor Department.
