Social Security Cost-of-Living Adjustment Forecasted at 2.5% for 2025

Based on consumer price data that was lower than last year, the Senior Citizens League, a nonprofit advocacy group, is projecting that the Social Security cost-of-living adjustment for 2025 will be 2.5%.

The Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index rose 2.5% over the last year through August. A COLA of 2.5% would raise the average monthly benefit for retired workers by $48 to $1,968, according to the Senior Citizens League.

The Social Security Administration is expected to officially announce the COLA for 2025 in mid-October.

The projection is less than this year’s COLA, which was 3.2%. However, the Senior Citizens League argued that this would not be far from the historical norm, as the annual COLA has averaged about 2.6% over the last 20 years.

The COLA is calculated by taking the average inflation from the third quarter of the current year and comparing it with the average inflation from the third quarter of the previous year. The inflation measure used for the COLA is the Consumer Price Index for Wage Earners and Clerical Workers.

Due to a higher cost of living, the Senior Citizens League has expressed concerns that retirees are using more and more of their income each month just to get by. For example, in the nonprofit’s 2024 Retirement Survey, 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023.

In addition, the survey found that 80% of senior households reported that their monthly budget for essential items like food, housing and prescription drugs had increased over the last 12 months.

“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, TSCL’s executive director. “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.”

Meanwhile, the Social Security Old Age and Survivor Insurance Trust Fund is expected to become insolvent by 2033, according to a projection from the Social Security Administration’s board of trustees, which is unchanged from last year’s projection. The SSA projects that in 2033, the fund’s reserves will become depleted, and continuing program income will be sufficient to pay 79% of scheduled benefits.