Social Security recipients can expect next year's annual cost-of-living adjustment (COLA) to be the lowest since 2021, following cooler inflation readings in July and August.
On Wednesday, the Bureau of Labor Statistics reported the consumer price index climbed 2.5% year on year.
Combined with the 2.6% reading in July, and a similar reading expected for September, Social Security beneficiaries are on track to see a payment increase of about 2.5%, according to The Senior Citizens League, an advocacy group.
That equates to an increase of about $46.80 per month.
While the lower COLA forecast reflects an economy that is enjoying a slower pace of price growth, Social Security advocates say seniors and others on fixed incomes are uniquely affected by the inflationary environment.
They are less able to seek alternative sources of income, and are exposed to a different set of goods and service prices compared with the rest of the population, experts say.
"Inflated prices persist on key essentials such as housing, meats, auto insurance, any type of service and repairs,” Mary Johnson, an independent Social Security analyst, said in a release.
The situation is likely to remain especially dire thanks to rising costs for Medicare Part B, the portion of Medicare that helps pay for things like ambulance services, some medical equipment and clinical research.
Earlier this year, the Medicare Board of Trustees estimated that the Part B premium, which is automatically deducted from monthly Social Security checks, would climb by $10.30, or 5.9%, to $185 per month in 2025.
Johnson said that amount would equate to about one-fifth of the expected overall increase entailed by a 2.5% COLA.
The Social Security Administration is expected to announce the official cost-of-living adjustment for 2025 on Oct. 10.
A survey conducted by the Senior Citizens League found 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023.
"Due to a higher cost of living, older Americans are using more and more of their income each month just to get by compared to a year ago," the League said Wednesday.
Much of the political debate about Social Security remains focused on reforming — and ultimately paring back — the entire program. But earlier this year, Democratic Sen. Bob Casey of Pennsylvania introduced the Boosting Benefits and COLAs for Seniors Act, designed to increase Social Security benefits at a rate "that actually reflects the costs seniors face."
The bill would tie COLAs to an alternative inflation index created by the Bureau of Labor Statistics that is designed to more accurately reflect prices paid by Americans aged 62 or older.
“For millions of older adults in Pennsylvania and across the Nation, Social Security is the promise of a safe and stable retirement,” Casey, who is in a tight re-election race, said in a statement when he introduced the bill.
“As the costs of basic goods and services for seniors rise, we cannot allow that promise to be broken," he said. "The Boosting Benefits and COLAs for Seniors Act would help seniors contend with rising costs and ensure that Social Security remains a lifeline for all who need it.”
