Social Security recipients can expect a 2.5% cost-of-living adjustment (COLA) increase in their payments starting in 2025 amid cooling inflation.
It’s the smallest increase since 2021. The amount equates to a top-line figure of approximately $48 more per month, with average check amounts rising from $1,920 to $1,968.
On Thursday, the Bureau of Labor Statistics reported the 12-month consumer price index inflation rate hit 2.4% in September. The Social Security Administration calculates the annual COLA based on consumer price growth in the months of July, August and September. In July, consumer prices rose 2.9% on the year, and in August they climbed 2.6%.
Advocates for Social Security recipients have long argued that seniors have a different — and more cost-prohibitive — set of spending patterns that are not reflected by the current COLA determination process, which tracks a measure known as the consumer price index for urban wage earners and clerical workers.
The pandemic only exacerbated the issue.
“Even though the rate of inflation has dropped, prices are still high on certain essential items, like food and housing,” said Mary Johnson, an independent analyst who tracks changes in the COLA.
Data supports that impression. Since 2023, an unofficial price index tracked by the Bureau of Labor Statistics that measures goods and services more likely to be purchased by adults ages 62 and older, known as the CPI-E (for CPI “elderly”), has been rising faster than the current index used by the Social Security Administration to calculate its annual cost-of-living adjustment.
That, advocates say, is proof that seniors and other Social Security recipients are facing a declining standard of living. And the COLA increase alone is not the final word on how recipients’ payments will change next year: When factoring in Medicare Part B costs, which are automatically deducted from Social Security checks, the new monthly amount for 2025 is projected to drop by about $10.
In general, health care costs are changing as a result of the Inflation Reduction Act passed in 2022. And while that law introduced new caps on out-of-pocket spending, it has created unintended consequences in the marketplace that have seen existing prescription drug plans being phased out.
Some elected officials have reintroduced legislation to switch to the CPI-E, but advocates are doubtful it will be taken up given the current political environment in Washington and the difficulty of addressing anything related to Social Security or Medicare.
“Congress knows this problem is going on, but the gridlock can’t seem to solve anything, much less the third rail of politics that is Social Security,” said Shannon G. Benton, executive director of the Senior Citizens League, an advocacy group.
