After decades of almost no increase, Social Security recipients have enjoyed larger than usual cost of living adjustments (COLA) since 2022. Unfortunately, those increases were because of rising inflation.
Now that inflation is cooling, the Senior Citizens League (TSCL) predicts the 2025 COLA, which will begin with January payments, will be the smallest since 2021.
TSCL’s model predicts that retirement benefits will increase 2.5% in 2025, down from the 3.2% COLA seniors got in 2024. That’s actually closer to the historical norm.
The COLA has averaged about 2.6% over the past 20 years. It went as low as 0.0% in 2010, 2011, and 2016 and as high as 8.7% in 2023.
The formula
The COLA uses a formula that is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August and September. The government will announce the amount of the COLA in mid-October.
The Bureau of Labor Statistics averages the CPI-W for these three months and then compares it with the same time frame from the previous year. The percentage difference between the two is the COLA, payable for checks received in January 2025. The 2024 COLA computation can be found on the Social Security website.
TSCL has long argued that the government’s formula is not enough to keep pace with inflation. In its 2024 Retirement Survey, TSCL said it found that 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023.
Expenses are rising
And it’s not just low-income seniors who are having to spend more these days. The chart below shows there is an increase in older Americans who spend at least $4,000 or $6,000 per month compared to 2023, while fewer can get by on $1,000 or less. 
The government will announce the actual percentage in October. According to TSCL, nearly 80% of senior households in the 2024 survey reported that their monthly budget for essential items like food, housing, and prescription drugs had increased over the last 12 months, with 63 % saying they're worried that their income won't be enough to cover these basic costs in the coming months.
"Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%," says Shannon Benton, TSCL's executive director. "TSCL research shows that approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely."