According to recent projections, Social Security recipients may see the smallest cost-of-living adjustment (COLA) since 2021. Based on current inflation rates, the 2025 COLA is expected to be around 2.63 to 2.7 percent. This marks a historic period of consistent adjustments, with the first time in nearly 30 years that four consecutive COLAs have reached at least 2.6 percent.
The previous increases were 5.9 percent in 2022, 8.7 percent in 2023, and 3.2 percent in 2024. However, the lower percentage for 2025 may feel like a financial pinch for beneficiaries, as current inflation rates affect the prices of essential needs for seniors, such as mortgages and medical care. Janet Albrecht, a 78-year-old retired graphic designer from Indiana, Pennsylvania, has felt the impact of rising costs.
She estimates she’s paying $100 more monthly at the supermarket than before inflation, and her landlord has increased her monthly rent by $65 over the past two years. “I’m down to eating ramen for lunch, which I never ate in my life until recently,” Albrecht said.
Inflation impacts Social Security benefits
“If it’s not marked down, I just don’t eat it. I haven’t eaten beef since, I don’t know when. I can’t afford it,” says Janet Albrecht.
According to a recent analysis by The Senior Citizens League, an advocacy group, Social Security benefits have lost 20% of their buying power since 2010.
Eight of the last 15 adjustments have come in lower than inflation for that year. The exact amount of the 2025 COLA will not be confirmed until the official announcement on Oct. 10.
The Social Security Administration sets its yearly COLA based on inflation during the third quarter, from July through September, using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Some advocates and lawmakers argue that the CPI-W does not accurately reflect the spending habits of older Americans, who can spend up to 16% or more of their income on health costs, compared to the 7% assumed by the CPI-W for younger workers.
