Social Security Recipients to See Smallest COLA Increase in Four Years

Social Security beneficiaries are poised for one of the smallest Cost of Living Adjustments (COLA) in recent years, according to the latest forecast. The nonpartisan Senior Citizens League (TSCL) has revised its COLA prediction for 2025, forecasting an increase of just 2.57%, down from the 2.63% estimate from the previous month.

Alex Moore, a statistician at TSCL and managing partner at Blacksmith Professional Services, noted that this forecast marks the lowest COLA increase since 2020, which saw a modest 1.3% adjustment. This follows a substantial 5.9% increase in 2021 and a record-setting 8.7% in 2022. COLA adjustments are meant to protect benefits from inflationary erosion and are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks the average price of a basket of goods and is compared year-over-year to determine the necessary adjustment.

The CPI data indicates a slight drop in inflation, with the rate decreasing to 2.9% in July from 3% in June. However, this reduction has yet to alleviate the financial strain felt by many seniors. According to the TSCL's 2024 Retirement Survey, 71% of 2,016 respondents cited the persistent high cost of living as a major concern, leading them to exhaust their savings. Additionally, 78% reported that their monthly expenses for essentials such as housing, food, and medicine have risen compared to the previous year, and 62% expressed worry that their retirement income will fall short of covering these necessities.

The final COLA figure for 2025 will be determined by data from July, August, and September, and is expected to be announced in early October. Most Social Security recipients will see this adjustment reflected in their benefits starting in January 2025.