Recent forecasts indicate that recipients of Social Security might experience the lowest cost-of-living adjustment (COLA) since 2021. With current inflation trends, the COLA for 2025 is anticipated to be between 2.63 and 2.7 percent. This situation reflects a unique era of steady adjustments, marking the first instance in almost three decades where four successive COLAs have surpassed 2.6 percent.
Notable previous increases included 5.9 percent in 2022, 8.7 percent in 2023, and 3.2 percent in 2024. Yet, the decline in 2025’s adjustment may create financial strain for recipients, as inflation impacts the costs of essentials for older adults, including housing and healthcare. Janet Albrecht, a 78-year-old retired graphic designer residing in Indiana, Pennsylvania, has felt the burden of escalating expenses.
She estimates that her grocery bills have increased by $100 per month since inflation began rising, and her landlord has raised her rent by $65 over the last two years. “I’m down to eating ramen for lunch, which I never had to do before. I never thought I would find myself in this position,” said Albrecht.
The effects of inflation on Social Security benefits
“If it’s priced too high, I simply can’t buy it. I don’t even remember the last time I had beef. I just can’t afford it,” stated Janet Albrecht.
A recent study by The Senior Citizens League, an advocacy organization, revealed that Social Security benefits have lost 20% of their purchasing power since 2010.
Out of the last 15 COLA adjustments, eight have fallen short of that year’s inflation rate. The specific figure for the 2025 COLA will be officially announced on October 10.
The Social Security Administration determines the annual COLA by evaluating inflation in the third quarter, from July to September, utilizing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Some advocates and lawmakers argue that the CPI-W fails to accurately reflect the expenditure patterns of older Americans, who may allocate as much as 16% or more of their income to healthcare, while the CPI-W assumes only 7% for younger workers.
