The Social Security COLA for 2025 will be smaller due to various reasons.

• Over 72.5 million Social Security beneficiaries will receive a 2.5% cost-of-living adjustment in 2025, as announced by the Social Security Administration on Thursday.
• Some believe that the increase in measures for seniors does not accurately reflect their expenses.

In 2025, the Social Security Administration has announced that the cost-of-living adjustment will be 2.5%.

Since 2021, the lowest adjustment to benefits that beneficiaries have seen is the 1.3% cost-of-living adjustment.

The cost-of-living adjustment for Social Security was introduced to ensure that benefits remain inflation-adjusted.

The COLA is determined by the percentage increase in the CPI-W from the third quarter of the previous year to the third quarter of the current year.

The Social Security Administration has announced a 2.5% COLA for 2025. The House may force a vote on a bill that affects pensioners' Social Security benefits. 72% of Americans are concerned that Social Security will run out in their lifetimes.

The annual increase in benefits has decreased due to the subsiding pace of inflation as indicated by government data.

According to Charles Blahous, senior research strategist at George Mason University's Mercatus Center, it's better when the number is small because it means that the inflation experienced by seniors is not as bad as it might have been.

In 2016, 2011, and 2010, the Social Security COLA was zero, and beneficiaries did not receive any increases.

For retirees, people with disabilities, and other beneficiaries, the lower adjustment for 2025 is a challenge as they still face high costs.

"We took lower costs for granted before inflation got so high," said Mary Johnson, an independent Social Security and Medicare policy analyst who is also a Social Security beneficiary. "It has significantly changed how we have to manage since then."

The Senior Citizens League's executive director, Shannon Benton, stated that a lower cost-of-living adjustment when prices are still high and inflation was higher earlier in the year will be a "real sticker shock for some people."

Experts debate best COLA measurement

Whether a different measurement should be used for the cost-of-living adjustment is a topic of discussion among advocates and lawmakers. Congress would need to approve any such change.

The annual increase that automatically compounds from year to year is highly valuable, according to Jenn Jones, vice president for government affairs at AARP.

Social Security is truly unique, special, and crucial for older Americans, as Jones stated.

The CPI-E, an experimental index, may better reflect seniors' spending patterns, according to the AARP.

Jones stated that when Congress decides to work together to secure Social Security's financial future, CPI-E should be included in the conversation.

The National Committee to Preserve Social Security and Medicare and Social Security Works, among other senior advocacy groups, supported the switch to the CPI-E after the announcement of the COLA for 2025 on Thursday.

Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, stated that the traditional formula (CPI-W) does not fully account for the impact of inflation on the goods and services seniors spend the most money on, particularly in the areas of health care and housing.

Blahous argued that the chained CPI, which measures changes in consumer spending patterns, would be a better fit for Social Security beneficiaries because one-third of them are not elderly.

This November, the ballot will decide whether Social Security's annual cost-of-living adjustment is measured differently, as Washington lawmakers have proposed bills proposing such changes.