Social Security set to change before end of year – while 2025 increase predicted to drop to 2.5%

THE next cost-of-living adjustment for Social Security recipients, already projected to be the lowest in years, continues to fall even further.

Based on the department’s consumer price index data through August, Social Security recipients could see a modest 2.5% increase in their payments next year.

This projected 2.5% adjustment marks a further decline from the earlier estimates of 2.63% in July and 2.57% in August, as reported by The Senior Citizen’s League, a nonpartisan advocacy group for seniors.

It represents the smallest increase since 2021, when beneficiaries received a 1.3% bump.

For an average retired worker receiving a monthly benefit of $1,920, this increase would amount to an additional $48 per month, according to a recent TSCL press release.

"An average increase of $48 in Social Security benefits for 2025 means that recipients who depend on Social Security as their primary source of monthly cash flow will see an almost insignificant boost in their monthly income after their Medicare Part B Premiums are deducted and they pay for Medicare Part D," TSCL executive director Shannon Benton exclusively told The U.S. Sun.

"A 2.5% increase for those on a fixed income does little in helping to offset rising costs of living such as inflation or price increases for essential goods and services. It most certainly will not cover all increased expenses," she added.

COOLING DOWN

The Social Security Administration uses annual COLA adjustments to help recipients retain their purchasing power amid inflation.

These adjustments are calculated based on the Bureau of Labor Statistics’ CPI-W, which measures changes in prices for a broad basket of goods and services commonly purchased by urban wage earners and clerical workers.

Due to record inflation in recent years, the COLA reached 8.7% in 2023, its highest point in decades, before falling to 3.2% in 2024.

The projected 2.5% increase reflects a continued downward trend as inflation rates cool.

While a 2.5% increase is closer to historical averages — the COLA has averaged about 2.6% over the past 20 years — TSCL argues that it may still be insufficient to cover seniors’ rising living costs.

The advocacy group has highlighted that the cost of necessities like medication, housing, and groceries is not always accurately reflected in the CPI-W.

“This year’s COLA will be important because many seniors said it didn’t keep up with their real-life expenses last year,” TSCL noted in a June report.

In its 2024 Senior Survey, 69% of approximately 1,550 respondents reported that their household costs rose faster than their COLA in the previous year, with food and housing being the primary drivers of these increases.

RISING PRESSURE

The TSCL’s findings also indicate that older Americans are spending more of their income each month just to cover basic expenses.

According to its 2024 Retirement Survey, 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023.

This trend was consistent across various income levels, with more seniors reporting monthly expenses of $4,000 or even $6,000 compared to the previous year.

This rise in essential spending comes amid growing concerns that the current COLA may not adequately address the financial needs of senior citizens.

Nearly 80% of senior households in the 2024 survey reported an increase in their budget for essential items like food, housing, and prescription drugs over the past year.

Additionally, 63% expressed worry that their income may not be sufficient to cover these basic costs in the months ahead.

“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%,” says 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.”

EYES ON OCTOBER

The official COLA for the upcoming year will be announced by the SSA in mid-October, following the release of the September CPI data.

The annual adjustment is based on average inflation during July, August, and September, as measured by the CPI-W.

As Social Security recipients await the final determination, many are left grappling with the reality of rising costs and a potentially insufficient adjustment to meet their needs.

The projected 2.5% increase, while close to historical norms, still leaves many seniors worried about maintaining their standard of living amid ongoing financial challenges.

For more on Social Security, readers can follow The U.S. Sun's extensive coverage on the topic.

Some Social Security beneficiaries who live in nine states might have to pay higher taxes in September, leading to smaller checks.

Plus, a change to Social Security may lead to a benefit increase for individuals.