Slowing inflation means that Social Security beneficiaries will see the lowest cost-of-living adjustment since 2021, according to experts. 

The government is expected to make an announcement in mid-October. The increase would be reflected in the payments beneficiaries receive in January.

Based on numbers released Wednesday by the Bureau of Labor Statistics, the latest COLA forecast for Social Security is 2.5%, according to personal finance news outlet Kiplinger. That’s down from last month’s estimate of 2.6%.

The average monthly Social Security retirement benefit in August was a little less than $1,800. Kiplinger estimates that a 2.5% increase would translate into an increase of about $47 per month or $564 annually for the average beneficiary.

“While 2.5% is lower than the 3.2% received in 2024, that wouldn’t be far from the historical norm. The COLA has averaged about 2.6% over the past 20 years,” the Senior Citizen League reported. “It went as low as 0.0% in 2010, 2011 and 2016 and as high as 8.7% in 2023.”

The annual adjustment is based on average inflation during July, August and September each calendar year as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. The index considers everyday expenses such as food, consumer goods and housing.

According to the Social Security Administration, the annual COLA provision became law under 1972 Social Security Amendments. Before that, any increases in benefits had to be enacted by Congress.

Earlier this year, Sen. Bob Casey (D-PA), chair of the Senate Special Committee on Aging, introduced legislation aimed at changing the way cost of living increases are calculated. Casey and bill co-sponsors Sens. Richard Blumenthal (D-CT), John Fetterman (D-PA), Kirsten Gillibrand (D-NY), Bernie Sanders (D-VT) and Peter Welch (D-VT) suggested that the Consumer Price Index for Americans aged 62 or more years would be a more appropriate price index for evaluating the actual costs incurred by older adults. 

Blumenthal, Fetterman and Gillibrand also are members of the Aging Committee.

“The Boosting Benefits and COLAs for Seniors Act would help older adults contend with rising costs and ensure that Social Security remains a lifeline for all who need it,” Casey stated in a press release in March.