Social Security beneficiaries will get a 2.5% raise in 2025—the lowest hike since 2021, according to the Social Security Administration.

Consumer advocates criticized the hike as being insufficient after several years of steep inflation.

“This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses,” said TSCL executive director Shannon Benton, executive director of the Senior Citizens League (TSCL).

The annual cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners (CPI-W), which came in at 2.2% for September, the Bureau of Labor Statistics announced today.

The increase is the lowest since 2021. Recipients this year received a 3.2% increase, much lower than the 5.9% hike in 2023 and 8.7% in 2022, which were the biggest increases in four decades.

On average, retired workers’ Social Security checks will increase by an estimated $48 to $1,968 on January 1, according to TSCL, an Alexandria, Va.-based seniors advocacy group.

The group, in a statement, said it had anticipated the cooling of inflation and a disappointing COLA since the beginning of the year, noting that it had predicted the 2.5% increase long before today’s announcement.

She said TSCL’s research shows that 67% of seniors depend on Social Security for more than half their income and 62% worry that their retirement income will not be enough to cover essentials like groceries and medical bills.

“Seniors–and TSCL–demand that Congress takes immediate action to strengthen COLAs to ensure Americans can retire with dignity, such as instituting a minimum COLA of 3% and changing the COLA calculation from the CPI-W to the CPI-E," Benton said.

The AARP said the COLA hike will bring seniors some relief, but many will still struggle with elevated consumer prices.

"Inflation took a financial toll this past year, particularly on retirees, who often rely on Social Security as a key source of income," AARP CEO Jo Ann Jenkins said in a prepared statement. "Even with this adjustment, we know many older Americans who rely on Social Security may find it hard to pay their bills. Social Security is the primary source of income for 40% of older Americans."

TSCL, the AARP and other advocacy groups and labor organizations have long supported a CPI Index that more closely represents the price changes experienced by retirees. The CPI-E, they argue, reflects inflation experienced by retirees as growing more quickly in most years than the CPI-W, which does not accurately reflect the spending patterns of retired households.

Retires, they note, tend to spend more on healthcare and housing costs and less on gasoline and energy prices, which significantly impact COLA because that sector is weighed more heavily in the CPI-W.