The annual Cost of Living Adjustment (COLA) Social security spending is expected to be at its lowest since 2021 in 2025, with inflation declining.

The annual COLA, which increases beneficiaries’ monthly benefits to account for inflation, is determined based on the average inflation rate for the months of July, August, and September compared to the previous year, as measured by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) in its monthly Consumer Price Index (CPI) reports.

An estimate from the Senior Citizens League (TSCL) projects the COLA for 2025 to be 2.5%, based on the September inflation forecast that the Labor Department will release next month. As of August, year-over-year inflation has fallen to 2.5%.

TCSL said this would increase the average monthly social security benefit of $1,920 by an additional $48. The updated benefit amount would take effect when Social Security checks are first distributed in January 2025.

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According to an analysis by TSCL, the COLA will be 2.5% in 2025, which would increase the average monthly benefit by $48. ( / iStock)

The COLA of 2.5% would be less than the adjustment of 3.2%, which Recipients of social benefits for 2024, but would be roughly in line with the historical norm – having averaged 2.6% over the past 20 years.

“Ensuring that seniors have enough to feed and shelter with dignity is a key reason we advocate for a minimum 3% COLA,” said Shannon Benton, TSCL’s executive director. “TSCL’s research shows that about two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% rely entirely on it.”

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The Social Security Administration will announce the official COLA for 2025 in mid-October. (Jeffrey Greenberg/Education Images/Universal Images Group via/Getty Images)

TSCL pointed to the cost of living challenges facing older Americans, citing results from its 2024 Retirement Survey that found 65% of seniors have monthly expenses of at least $2,000, up from 55% in 2023.

This survey found that compared to 2023, more seniors will spend at least $4,000 or $6,000 per month, while fewer will get by on $1,000 or less.

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In addition, the study found that nearly 80 percent of senior households surveyed said their monthly budget for essentials had increased in the past 12 months, while 63 percent said they were concerned that their income would not be enough to cover basic expenses in the coming months.

The Social Security Administration (SSA) will announce the official COLA for 2025 in mid-October, after the Labor Department releases September inflation data.