2025 COLA Watch: Latest forecasts show lower Social Security benefit increase

After the Bureau of Labor Statistics (BLS) released the May Consumer Price Index Report (CPI), organizations publishing forecasts for the 2025 Social Security COLA got to work.

The annual Cost-of-living Adjustment, or COLA, offered to beneficiaries of all programs overseen by the Social Security Adminstration is calculated using the CPI for Urban Wage Earners and Clerical Workers (CPI-W). In May, the BLS tracked no change in the CPI-W, leading the Senior Citizens League (SCL), an organization that advocates for the rights of older Americans, to readjust their 2025 COLA forecast downward. As of mid-June, the SCL projects that COLA offered next year to be around 2.57 percent, down from the 2.66 percent figure published by the organization in May.

Seniors are struggling to keep

However, a smaller COLA increase could worsen the financial position of many seniors who have not seen their benefits keep up with the rapid increases in the cost of living seen in the US and economies around the world over the last two years. The SCL points to a survey they conducted of more than 1,500 seniors, which found that “their household costs rose faster than the COLA last year.”

The primary driver of inflation reported by the BLS this year has been housing, one of the costs seniors have struggled to adjust to most. When on a fixed income, as many Social Security beneficiaries are, seeing costs rise rapidly can eliminate one’s purchasing power very quickly, and it is difficult to earn back, particularly when the sectors most affected are essential to life. Regaining one’s purchasing power is even more difficult when, as the SCL reports, only “one of the five COLAs implemented so far in the 2020s (20%) has outpaced inflation.” This figure is down from forty percent in the 2010s, and sixty percent in the early 2000s and 1990s.