Social Security benefits are projected to rise 2.5% in 2025

The nation's more than 70 million Social Security recipients may want to temper their expectations of how much more they'll be getting in 2025. Retirees are looking at an average monthly bump of $48, or an increase of 2.5%, according to projections released on Wednesday.

The 2025 cost-of-living adjustment, or COLA, which is based on the rate of inflation, is now forecast to come in below last month's 2.57% calculation, the Senior Citizens League (TSCL), an advocacy group for older Americans, said. The updated forecast came hours after the government reported that prices rose 2.5% in the 12 months ending in August, as inflation continues to moderate.

The projected increase is not yet official, as the Social Security Administration typically determines the following year's COLA in mid-October. A 2.5% rise would translate into an average monthly benefit of $1,968, and show up in most recipients' January benefit check. 

Though a 2.5% hike would be less of an increase than the 3.2% received in 2024, it falls roughly within the bounds of the historical norm, which has averaged at about 2.6% over the past two decades. The COLA ran as low as 0.0% in 2010, 2011 and 2016, and as high as 8.7% in 2023. 

The Social Security Administration sets its yearly COLA based on inflation during the third quarter, or from July through September. The agency takes the average inflation rate over that period from what's known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which tracks spending by working Americans.

If that inflation rate is higher than the same period a year earlier, the COLA is adjusted upward by the difference. 

"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%," Shannon Benton, TSCL's executive director, said in a statement. "Approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely," added Benton, citing TSCL research.

That reliance could come into sharper focus in the years ahead as Social Security edges closer to a financial cliff that experts warn could eventually lead to steep benefits cuts. A recent analysis by the Committee for a Responsible Federal Budget, a nonpartisan group focused on fiscal issues, found that a typical couple could see their Social Security benefits reduced by more than $16,000 by 2033 if the program's trust fund becomes insolvent.