Seniors may get the smallest increase in Social Security’s cost of living in years as consumers still face the pain of inflation

For seniors on fixed incomes, today’s news that inflation continues to cool is bittersweet. That’s because even as the rate of inflation slows, the annual cost-of-living adjustment (COLA) for Social Security payments is also expected to decline this year.

The latest COLA forecast from The Senior Citizens League (TSCL), a nonpartisan advocacy group, expects Social Security payments to increase by just 2.5% next year. (The official COLA announcement is expected in early October.) Last year’s COLA was 3.2%, and the year before, it was 8.7% as the US faced rising prices.

But with today’s announcement of the Consumer Price Index (CPI) showing that annual inflation has slowed to 2.5%—still above the 2% target. the lowest in a few years.

Overall, it means those who rely on Social Security to survive may have a tougher time making ends meet next year, as the COLA won’t be as strong as it has been in recent years—even as rates continue to rise. If next year’s COLA comes in at 2.5%, as forecast, it will amount to an average increase of $48 a month for Social Security recipients.

“Ensuring that seniors have adequate food and housing with dignity is a major reason why we advocate for a COLA of at least 3%,” said Shannon Benton, executive director of TSCL, in a statement. “TSCL research shows that nearly two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% rely on it entirely.”

The annual COLA adjustment is determined by averaging inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the months of July, August, and September, and is compared to the previous year’s average. The settlement is finally decided and announced in October and takes effect with the December benefit payments.

But again, while progress has been made in reducing inflation, those on fixed incomes and who rely heavily on Social Security have struggled with price increases over the past few years, and a small COLA may not be enough to bridge the gap for many. gap—putting some older people in increasingly difficult financial positions.