The cost-of-living adjustment of social security for 2025 could be 2.5%

Due to record-high inflation, welfare recipients have faced greater cost-of-living adjustments in recent years.

However, the increase next year is unlikely to be quite as generous.

Based on new government inflation data, beneficiaries could potentially expect only a 2.5 percent increase in their benefits in 2025, estimates Mary Johnson, an independent Social Security and Medicare analyst.

In 2024, more than 71 million Americans, including those receiving Social Security benefits and supplemental income, experienced a 3.2% cost-of-living adjustment, according to the Social Security Administration.

A rise in inflation pushed the annual benefit increase even higher in 2023, when there was an increase of 8.7%, the highest in four decades. This followed a 5.9% increase in 2022, which also marked a recent high at the time.

In 2021, the cost of living adjustment was 1.3%.

If a COLA of 2.5% were to come into force in 2025, Johnson said this would be average.

Importantly, the estimate for the Social Security cost-of-living adjustment may change in 2025.

The Social Security Administration is expected to announce the official benefit increase in October, which will include the government's new inflation data for September. Johnson said the current estimate of 2.5 percent gave him about a 17 percent chance of an increase and a 13 percent chance of a decrease.

The annual Social Security cost-of-living adjustment is calculated using third-quarter data from a subset of the consumer price index called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

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