Social Security COLA increase for 2025 projected to be lowest in several years

(NEXSTAR) – The next cost-of-living increase for Social Security recipients is projected to be the lowest in years, according to The Senior Citizen’s League.

The Senior Citizen’s League (TSCL), a nonpartisan senior advocacy group, released its latest estimate on Thursday. Based on figures from the Labor Bureau’s most recent Consumer Price Index for Urban Wage Earners (CPI-W), next year’s cost-of-living adjustment (COLA) is projected to be only 2.63%.

If that estimate holds true through October — when the COLA is officially announced — it would be the lowest increase since 2021’s 1.3% adjustment.

The Social Security Administration’s yearly cost-of-living adjustments are designed to help Social Security and Supplemental Security Income (SSI) recipients retain their buying power amid rising inflation. These increases, which are issued annually, are determined using the Bureau of Labor’s CPI-W, which itself is a measure of the change in prices for common consumer goods and services.

In the past, however, seniors have complained that the CPI-W doesn’t necessarily take into account their spending habits.

“This year’s COLA will be important because many seniors said it didn’t keep up with their real-life expenses last year,” TSCL wrote in a June report. “Among the roughly 1,550 participants in TSCL’s 2024 Senior Survey, 69 percent said their household costs rose faster than the COLA last year, with costs for food and housing leading the way.”

The price of groceries, especially, were a focus of TSCL’s latest release. Using data from the Bureau of Labor Statistics, the organization estimated the cost of the “average grocery item” to have inflated by 24% since 2020.

Still, TSCL’s most recent COLA estimate is slightly higher than the group’s June estimate, when they predicted a 2.57% increase for 2025. But it’s still below the 3.2% increase afforded to Social Security recipients in 2024, and nowhere near the 8.7% and 5.9% increases for 2023 and 2022’s recipients, respectively.

Those larger increases were designed to mitigate the effects of historic inflation. But even with those adjustments, seniors said they continue to pay higher-than-expected prices on key items like housing, food and healthcare, survey results have indicated.

TSCL also feels that the Labor Bureau’s CPI-W — which the Social Security Administration uses to calculate yearly COLA increases — is not a good metric for determining the average senior’s spending habits.

“It’s not like we have a target number we were hoping for,” Mary Johnson, a policy analyst with the Senior Citizen’s League, previously said. “We want to see an approach that’s more comprehensive. … People are also living longer lives in retirement, so it’s hard for anyone to save for that.”

The Senior Citizen’s League releases an updated COLA projection each month. Next year’s cost-of-living adjustment will be announced by the Social Security Administration in October, following the release of the Labor Bureau’s revised CPI-W data from July, August and September.