Here's how Social Security benefits may change in 2025 due to cost-of-living adjustment.

• The Social Security cost-of-living adjustment for 2025 will soon be announced.
• Since 2021, the expected increase in next year's benefit is the smallest adjustment.

The annual cost-of-living adjustment for 2025 for Social Security beneficiaries will soon be revealed.

If current projections are accurate, the increase in benefits could be the lowest since 2021.

Last month, Mary Johnson, an independent Social Security and Medicare analyst, predicted that the Social Security cost-of-living adjustment, or COLA, could be 2.5% next year.

According to Johnson's calculations, the average retired workers' benefit of $1,920 would increase by $48 per month if the change is implemented.

The COLA for 2025 is expected to be announced by the Social Security Administration on Thursday.

In 2022 and 2023, Social Security beneficiaries experienced the largest COLA increases in four decades, with 5.9% and 8.7%, respectively, in response to high inflation.

Despite a slight increase in benefits, many people are still experiencing financial strain due to higher prices, according to Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company. This is because the COLA for 2025 is expected to be smaller than previous years, which means their current income may not be sufficient to cover the cost of everyday goods and services.

"Although prices did not decrease, the rate of increase has slowed, which may be why people believe inflation has not slowed down, according to Elsasser."

The Senior Citizens League, a nonpartisan senior group, and Alicia Munnell, director of the Center for Retirement Research at Boston College, both predict a 2.5% COLA for 2025.

Over the past 20 years, the Senior Citizens League reports that the average annual increase in Social Security benefits, known as COLAs, has been approximately 2.6%.

1. Bill affecting pensioners' Social Security benefits may be voted on by the House. 2. Social Security survivor benefits may be missed out on by children. 3. 72% of Americans worry that Social Security will run out in their lifetimes.

Could the Social Security COLA estimate change?

Johnson's calculations from last month indicate that the current 2.5% estimate has a 17% chance of increasing and a 13% chance of decreasing.

The consumer price index, which will be used to determine the official Social Security cost-of-living adjustment, will be released on Thursday along with one more month of government inflation data.

The calculation of the Social Security COLA is based on a specific component of the Consumer Price Index, which is the Consumer Price Index for Urban Wage Earners and Clerical Workers, commonly referred to as CPI-W.

The percentage increase in CPI-W data from the third quarter of last year to the third quarter of the current year is used to determine the COLA.

According to Johnson, the effects of Hurricane Helene, which hit land on Sept. 26 in the evening, were likely too late to be included in September's data, as hurricanes can impact calculations.

Johnson stated that he believed the occurrence wouldn't impact his prediction.

Despite a decrease in gas prices last month, it might not be sufficient to impact the COLA calculation, she stated.

When will the 2025 COLA go into effect?

Beneficiaries of Social Security will receive an adjustment in 2025, which will be reflected in their January checks.

Beneficiaries can view their annual benefit adjustments earlier by checking their online My Social Security account or receiving a mailed paper statement from the agency in December.