Social Security recipients can expect a cost-of-living adjustment (COLA) of around 2.6% to 2.7% in 2025, according to recent forecasts. This would mark the first time in 32 years that Social Security benefits have seen four consecutive COLAs of at least 2.7%. The Senior Citizens League (TSCL) predicts a 2.63% COLA for 2025, while independent analyst Mary Johnson has slightly lowered her forecast.
These estimates are based on monthly inflation trends and can change as the official announcement approaches in October. COLAs are designed to help Social Security benefits keep pace with inflation. They are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the prices of goods and services.
However, many argue that the current COLA calculations do not adequately reflect the expenses faced by retirees. A TSCL report found that while COLAs have increased benefits by 78% since 2000, the cost of goods and services for retirees has risen by 141.4%.
Modest COLA expected for 2025
“The reality is that COLAs have become less and less likely to match inflation over time,” said Shannon Benton, executive director of TSCL. “In the 1990s and 2000s, 60% of COLAs beat inflation. In the 2010s, only 40% did.”
Retirees have seen a significant loss in purchasing power, with Social Security checks losing about 20% of their buying power since 2010.
To make up for this loss, the average retiree would need a $370 monthly boost in their benefits. Rapidly increasing expenses for seniors, such as Medicare premiums and the cost of shelter, electricity, and medical services, continue to outpace the overall rate of inflation. This means that even with a sizable COLA in 2025, retirees may still struggle to make ends meet.
“Even if the situation gets better, it’s not going to be enough to make up for all these years of loss,” Benton said. The Social Security Administration will announce the official 2025 COLA in mid-October, after the release of the September CPI data. While the exact figure may change, it is clear that retirees will continue to face challenges in maintaining their purchasing power in the face of rising costs.
