Inflation continues to run hot in the U.S. economy, driving up the Social Security cost of living adjustment, or COLA. The latest COLA calculation for 2025 suggests an increase of 2.6%, according to The Senior Citizens League, and it presents a double-edged sword.

The estimated increase, the third of its kind in 2024 so far, comes in response to soaring household expenses and depleted savings. If it holds, the adjustment would represent the fourth-straight annual COLA spike above the 2% threshold, a trend that hasn’t surfaced since the Great Recession and that is diminishing the buying power of seniors.

But it’s early, and COLA estimates keep rising from guesses of 1.75% and 2.4% in January and February, respectively. The latest tweak came in response to a jump in the CPI to a reading of 3.5% in March. With more CPI data yet to unfold, coupled with the Fed’s inability to tame inflation, the results are not set in stone yet.

On the one hand, retirees can expect to see bigger checks owing to the COLA increase. But the reality is that with inflation running amok, the adjustment won’t go very far, likely falling beneath the true cost of living adjustments as shelter prices soar.

Troubling Inflation Trend

The Social Security Administration (SSA) has been revising benefits and income amounts each year since 1975 using a formula that reflects the third-quarter CPI data for Urban Wage Earners and Clerical Workers from the prior year. COLAs are not promised, and Social Security recipients went without one as recently as 2015. But lately, Social Security recipients have been up against severe inflationary headwinds, resulting in a COLA gap that continues to widen since the pandemic.

This year, the 3.2% COLA increase (based on last year’s CPI) amounts to an additional nearly $60 per monthly check for the roughly one-in-five American citizens who collect Social Security, according to The Senior Citizens League. COLA has hovered above 2% since 2021, when it it reached multi-decade highs at 5.9%, followed by increases of 8.7% and 3.2% in 2022 and 2023, respectively.

If the latest estimates hold, COLA will have trended above 2% for four years, a stretch not experienced since the Great Recession, including a 5.8% increase in 2008, the largest such increase since the early 1980s. By way of comparison, the average COLA over the past two decades has been 2.6%.

Year	COLA
2004	2.7
2005	4.1
2006	3.3
2007	2.3
2008	5.8
2009	0.0
2010	0.0
2011	3.6
2012	1.7
2013	1.5
2014	1.7
2015	0.0
2016	0.3
2017	2.0
2018	2.8
2019	1.6
2020	1.3
2021	5.9
2022	8.7
2023	3.2
2024	2.6% (estimate)

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