The estimated cost-of-living increase for Social Security in 2025 could be 2.5%, which is the lowest since 2021, according to a recent study.

• Next year, Social Security beneficiaries may experience a decrease in their benefit increase due to decreasing inflation.
• In 2025, a new estimate suggests a 2.5% cost-of-living adjustment (COLA), which is near the typical increase that beneficiaries usually receive.
• The official cost-of-living adjustment for 2025 is expected to be announced by the Social Security Administration next month.

Recent years have seen record high inflation prompting higher cost-of-living adjustments for Social Security beneficiaries.

Yet next year's increase may not be as generous.

According to Mary Johnson, an independent analyst, beneficiaries may only receive a 2.5% increase in benefits in 2025 based on new government inflation data.

In 2024, over 71 million Americans, including Social Security and Supplemental Security Income recipients, received a 3.2% cost-of-living adjustment, as announced by the Social Security Administration.

In 2023, the annual benefit boost was further increased by 8.7%, the highest in four decades, due to a spike in inflation. This came after a 5.9% raise in 2022, which was also a recent high.

In 2021, the cost-of-living adjustment was 1.3%.

According to Johnson, if a 2.5% COLA goes into effect in 2025, it would be average.

The estimate for the 2025 Social Security cost-of-living adjustment is uncertain and may be subject to change.

The Social Security Administration is set to reveal the official hike in benefits in October, along with new government inflation data for September. According to Johnson, the current 2.5% estimate has a 17% chance of rising and a 13% chance of falling.

The Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, is used to calculate the annual Social Security cost-of-living adjustment using third quarter data.

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