2025 Social Security COLA Falls Once Again
The Social Security cost of living adjustment (COLA) is once again lower than last month’s analysis.
Next COLA Update: It’s Official: 2025 Social Security COLA Set at 2.5%
Previous COLA Update: 2025 Social Security COLA Prediction Keeps Falling
All COLA Updates: Social Security Cost of Living Adjustment (COLA)
That’s according to Mary Johnson, retired Social Security and Medicare policy analyst, and the nonprofit senior citizens advocacy group The Seniors Citizen League (TSCL), who today each released their own COLA predictions based on the latest inflation figures announced this morning by the U.S. Bureau of Labor Statistics (BLS). For September, both Johnson and TSCL forecast a 2.5% figure. Despite being Johnson’s lowest prediction since 2021, a 2.5% COLA would be considered about average, she adds.
“The 2025 COLA will be the lowest received by Social Security beneficiaries since 2021, at the same time inflated prices persist on key essentials such as housing, meats, auto insurance, any type of service and repairs,” says Mary Johnson, an independent Social Security and Medicare policy analyst.
The likelihood that the final 2025 COLA figures could be higher than 2.5% is about 17%, while the chances that it could drop lower is 13%, Johnson further predicts.
Today’s figure is also TSCL’s lowest forecast in months, which uses a different methodology than Johnson. In the past few analyses, TSCL’s figures have hovered between a narrow 2.57% to 2.63% range.
“The TSCL Social Security cost of living adjustment model predicts that the COLA for 2025 will be 2.5%, based on a decline from 2.9% to 2.5% in consumer price data,” stated TSCL in their analysis. “A COLA of 2.5% would raise the average monthly benefit for retired workers of $1,920 by $48.”
The latest figures come as older Americans are spending more of their income on daily needs compared to just a year ago. In TSCL’s 2024 Retirement Survey, 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023. Furthermore, a higher number of seniors are spending at least $4,000 or $6,000 per month compared to 2023, too, while fewer are able to get by on $1,000 or less, finds TSCL.
“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.”
A different analysis for Medicare
While Johnson estimates the 2.5% COLA could increase the average retiree benefit of $1,870 by about $46.80 (when rounded to nearest 10 cents), she notes that Social Security recipients won’t know the final number until Medicare Part B premiums for 2025 are announced.
Earlier this year, the Medicare Trustees estimated that the Part B premium would be $185 per month in 2025, an increase of $10.30 from $174.70 in 2024. The Part B premium, as well as any voluntary withholdings for taxes, are automatically deducted from the monthly benefit amount by the SSA.
Medicare Part B premiums and deductibles grew at twice the rate of the annual Social Security COLA over the past two decades, according to an analysis by Johnson. Using data from 2005 to 2024, Medicare Part B premiums increased by a total of 109.9 percentage points while Social Security COLAs totaled just 52.5 percentage points over the same period. The analysis found that Part B premiums increased on average by 5.5% per year, while COLAs averaged just 2.6%.
The reason for this difference is because Medicare costs are not included in the consumer price index currently used to calculate COLA figures, Johnson explains. However, she notes that other indexes used today, like the Consumer Price Index for the Elderly (CPI-E), could be a more appropriate tool to analyze Medicare premiums.
“Ironically that index, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), does not survey retired adults aged 62 and older, the very people the Social Security COLA is supposed to protect,” she adds.
Today’s analysis is the final one by both Johnson and TSCL before the Social Security Administration (SSA) releases its own official 2025 COLA announcement on October 10.
• EDITOR’S NOTE: This article has been updated to include the latest forecast released this morning by The Senior Citizens League.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
