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Annual Social Security adjustment expected to be much smaller this year

Social Security benefits have long failed to keep up with expenses, advocates say.
A person holds a social security card
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The Senior Citizens League is expecting that the cost-of-living adjustment for Social Security recipients in 2025 will be smaller than in prior years and probably will not keep up with inflation.

According to projections, Social Security is expected to increase benefits by 2.57% in 2025. The Social Security Administration will announce 2025's cost-of-living adjustment in October. Increases would then take effect two months later.

The estimated average monthly Social Security retirement benefit for January 2024 was $1,907. At 2.57%, the average monthly benefit would increase by about $49.

The last cost-of-living adjustment came in December 2023, when the Social Security Administration increased 2024 payments by 3.2%. One year earlier, officials raised checks by 8.7%. The 2023 increase was the highest cost-of-living adjustment made by the Social Security Administration since 1981.

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The Social Security Administration says it bases its cost-of-living adjustment on the consumer price index for urban wage earners and clerical workers. The Bureau of Labor Statistics releases consumer price index data monthly.

The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.

On Wednesday, officials said the annual inflation rate dropped to 2.9%, marking the first time in over three years the annual inflation rate has dropped below 3%.

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However, some experts have said Social Security has failed to keep up with actual costs incurred by recipients.

The Senior Citizens League said that Social Security recipients have lost 20% of their buying power since 2010. They said recipients would need an added $370 a month to make up the difference.

The organization said that between 2010 and 2024, Social Security recipients have received 58% more in benefits, but the cost of goods and services seniors use has gone up 73%. During that time, the average cost of living adjustment has been 3.9%.