Social Security increase is in line with inflation but trails key expenses
By Julie Weil / October 25, 2025
Millions of Social Security recipients will see a 2.8 percent cost-of-living increase in their monthly checks next year, the agency said Friday.
The ongoing government shutdown delayed the annual announcement of the cost-of-living adjustment (COLA), which is tied to the consumer price index, by about a week. On Friday, the Bureau of Labor Statistics said price rose 3 percent in September, year-over-year, compared with 2.9 percent in August.
The COLA means a recipient who collects the monthly average of nearly $2,000 will see an additional $56 come January.
While the increase is in line with overall inflation for the year, it trails categories that are particularly relevant to older adults. Friday’s consumer price index (CPI) reading showed that medical care climbed 4 percent from a year earlier, while electricity and piped gas jumped 5 and 11.7 percent, respectively.
AARP, the interest group for older adults, suggested in advance of Friday’s announcement that the benefits bump would fall short of filling seniors’ needs in today’s economy. According to an AARP survey conducted in September, 77 percent of older adults thought that a cost-of-living increase of around 3 percent would not be “enough to keep up with rising prices.” That view held across political affiliation, with 75 percent of Republicans and 79 percent of Democrats calling the COLA insufficient.
More than 51 million retirees receive Social Security benefits. The agency also disburses disability benefits for more than 7 million people, and more than 8 million receive survivor and dependent benefits.
Social Security is the only source of income for more than 1 in 4 adult recipients. Each person’s monthly benefit is based on their earnings and age at retirement.
The program faces a potential crisis in the years ahead: As America’s population ages, shifting the balance between workers who contribute to Social Security and those who benefit from it, the trust fund that fuels the program is running out. The trustees’ latest estimate predicted that the trust fund will run dry in 2033. At that point, the program could only pay beneficiaries using new money coming in from payroll taxes. Without a change to the law, that would mean a 23 percent cut in benefits.
Reactions to Friday’s announcement were mixed. Martin O’Malley, who led the Social Security Administration during the Biden administration, slammed the increase as insufficient. President Donald “Trump’s economy is forcing seniors and people with disabilities to choose between paying for food or medicine or utilities,” O’Malley wrote in a statement. “The COLA increase won’t even come close to covering the rising costs seniors and people with disabilities face — and Trump’s inflation is only predicted to get worse in coming months.”
But Romina Boccia, a Cato Institute expert on entitlement programs, said 2.8 percent is too high; she’d prefer to see the adjustment based on a different measure of inflation, the chained CPI. That takes into account the substitutions that consumers make — such as buying more chicken when beef gets too pricey — rather than simply calculating rising prices.
“These higher COLAs are increasing the Social Security fiscal gap at an excessively high rate,” she said. “Using the old, outdated index actually drives up Social Security costs more than is necessary to compensate beneficiaries for increases in the cost of living.”
The Committee for a Responsible Federal Budget suggested in a report this week that the program should save money by capping annual COLA increases, so that the beneficiaries who earned the most in their careers and thus get the biggest monthly checks wouldn’t receive the full COLA.