STATEN ISLAND, N.Y. — The roughly 70 million Americans who receive Social Security benefits are expected to see the smallest bump in their monthly checks since before the coronavirus pandemic.
Each year, Social Security benefits are subject to an annual cost-of-living adjustment (COLA) based on inflation rates to ensure that monthly payments keep pace with rising costs.
Social Security recipients received a 3.2% COLA in 2024, a significant decrease from the 8.7% COLA in 2023, which was the largest increase in four decades.
For 2025, using current inflation data from the Consumer Price Index, it’s estimated there will be a 2.5% COLA in 2025, according to The Senior Citizens League (TSCL).
The projected 2.5% increase would be the lowest since 2020, when monthly benefits increased by just 1.3%.
While the projected increase would be lower than recipients have grown accustomed to in recent years, it’s relatively in line with past increases, with the COLA averaging out at 2.6% over the past two decades.
“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 The Senior Citizen League’s. “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.”
Cost-of-living adjustments are determined using third-quarter data – July, August and September – from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Inflation for those three months is added together, averaged and then compared to the previous year’s third-quarter average, with the percentage difference between the current year and the previous year serving as the COLA rate for the upcoming year.
The Social Security Administration (SSA) officially announced the annual COLA in October, meaning recipients need to wait a few more months before finding out exactly how much their benefits will increase.
In 2023, an average of nearly 67 million Americans per month were collecting Social Security benefits, totaling over $1 trillion dollars in benefits paid during the year, according to the SSA.
Social Security benefits represent about 30% of income for Americans aged 65 and older, the administration said.
POTENTIAL COLA CALCULATION CHANGE
New federal legislation is looking to change COLA calculations to better align benefits with the actual expenses experienced by seniors.
The Boosting Benefits and COLAs for Seniors Act, introduced by Rep. Ruben Gallego, D-Arizona, proposes changes to the calculation of the COLA for Social Security recipients.
If enacted, this bill would require the use of the Consumer Price Index for Americans aged 62 and older to determine the COLA, replacing the current use of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The proposed change aims to provide a more accurate reflection of inflation experienced by seniors, particularly in areas such as healthcare, food and housing. Advocates argue that the CPI-W does not adequately capture the rising costs seniors face, leading to insufficient adjustments in Social Security benefits.
“It’s important that the COLA reflects how inflation impacts seniors so that we can pay our bills and our monthly Social Security checks stay strong,” said Roman Ulman, president of AFSCME Arizona Retirees Chapter 97.
The bill has garnered support from various organizations, including the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans, and the AFL-CIO. Bob Casey, D-Pennsylvania, has introduced companion legislation in the Senate.
If implemented, this new calculation method could lead to increased monthly benefits for Social Security recipients, ensuring that their payments better align with the actual expenses they incur.
If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.
