Social Security adjustment: Here's the smallest COLA increase ever paid

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• Updated: May. 04, 2024, 7:58 p.m.|
• Published: May. 04, 2024, 5:14 p.m.

STATEN ISLAND, N.Y. -- The latest projections for Social Security's 2025 cost-of-living adjustment (COLA) is around 2.6%, or about $45 per month, for the average beneficiary based on inflation.

The projection puts it in line with the 2.6% average annual increase seen over the past two decades.

While that estimate is below 2024′s 3.2% increase as well as 2023′s 8.7% adjustment, it is not the lowest COLA beneficiaries have received.

According to AL.com, there was no increase at all in 2009, 2010 and 2015. In addition, the COLA increased by only 0.3% in 2016.

The 8.7% increase was the largest since 1981 when inflation pushed Social Security benefits up 11.2%, according to the report. The highest, however, was in 1980 when COLA was 14.3%.

Social Security benefits and Supplemental Security Income (SSI) payments are subject to an annual COLA based on inflation rates to ensure that monthly payments keep pace with rising costs.

Cost-of-living adjustments are determined using third-quarter data — July, August and September — from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Inflation for those three months is added together, averaged and then compared to the previous year's third-quarter average, with the percentage difference between the current year and the previous year serving as the COLA rate for the upcoming year.

Social Security's 2025 COLA will be announced in October, and will go into effect in January.

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