inflation fell to its lowest level in three years is generally good news. But it also means that welfare recipients will likely see the smallest cost-of-living-related increase in monthly benefits since 2021.

For the country’s nearly 68 million pensioners, this change may seem abrupt, as there have been major benefit increases in recent years due to high inflation. Benefits rose by 5.9% in 2022 and have been adjusted upwards 8.7% for 2023.

The cost-of-living adjustment (COLA) for 2025 is expected to be about 2.57 percent, the Senior Citizens League, an advocacy group for older Americans, said Wednesday, down from last month. 2.63% forecastThe calculation is based on the inflation rate. Government figures published the day before showed that consumer prices in July rose by 2.9%the smallest increase since March 2021.

Although it’s not yet official, the Social Security Administration typically sets the COLA for the coming year in October. However, a 2.57% increase would represent a monthly increase of nearly $49 based on the current average monthly benefit of $1,900.

The new year’s COLA can be expected with the January benefit check for most recipients.

While wages are rising faster than inflation for many working Americans, older Americans on fixed incomes are worried about their savings being depleted, according to a survey of 2,016 seniors in July. More than three-quarters, or 78 percent, said they are spending more each month on basic needs such as housing, food and medicine compared to last year, TSCL said.

The Social Security Administration sets its annual COLA based on inflation during the third quarter, July through September. The agency takes the average inflation rate for this period from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks spending by working Americans.

If this inflation rate is higher than the same period of the previous year, the COLA is adjusted upwards to reflect the difference.

However, some advocates and lawmakers oppose the use of the CPI-W, arguing that older Americans spend differently than younger workers. For example, the Senior Citizens League has noted that the CPI-W assumes that workers spend about 7 percent of their income on health care, while older Americans can spend as much as 16 percent or more on health care costs.

While social benefits rose 58 percent between 2010 and 2024, the prices of products and services purchased by an average retiree rose 73 percent, according to the league. For example, the average cost of an iPhone – a must-have for retirees – has risen more than 300 percent since 2010, it said.