(NewsNation) — The Social Security Administration has announced a 2.5% cost-of-living adjustment for recipients in 2025, the smallest such increase since 2021.

On average, Social Security retirement benefits will increase by about $50 per month starting in January, a minor increase for most.

And recipients are feeling the pinch, with a recent survey from the Motley Fool showing a majority (54%) view this year’s COLA adjustment as insufficient. A similar number, 50% — have considered going back to work to make ends meet.

An even wider majority, 81%, agreed that the 2025 COLA will help “very little” or not “at all” with key expenses like food, housing and energy costs.

Social Security cost-of-living adjustments have varied over the past few years. Here’s how they have changed:

• 2025: 2.5%
• 2024: 3.2%
• 2023: 8.7%
• 2022: 5.9%
• 2021: 1.3%

The recent drop is due to a cooling pace of inflation, which is good for the overall economy but may leave retirees struggling to cover costs.

Often, retirees rely heavily (32%) or exclusively (28%) on payments despite Social Security being designed to cover 40% of the average worker’s salary.

Most respondents, 71%, don’t think the formula to determine the COLA accurately reflects how retirees experience inflation.

How is Social Security COLA determined?

Each year, the government determines the COLA by comparing the average inflation rate from July to September to the same period the year before. That calculation is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Some senior advocacy groups want the government to determine the COLA based on the CPI-E, a different inflation index specifically for seniors, arguing it would more accurately reflect the spending patterns of those 62 and older.

The vast majority of Social Security beneficiaries, roughly 75%, are retired workers who received an average monthly check of $1,920 as of August. That’s about $80 more than the year prior.

Social security shortfall

Thursday’s COLA announcement comes as the national social insurance plan faces a looming financial shortfall. In roughly a decade, Social Security recipients could see their benefits cut by 21% if Congress doesn’t take action.

Vice President Kamala Harris and former President Donald Trump have vowed to protect the program and promised not to slash benefits, though neither has offered many specifics.

The 2025 COLA increase will be reflected in your January Social Security check.

NewsNation’s Andrew Dorn contributed to this report.