Many Social Security recipients are worried about how they will pay for the 2.5% Cost of Living Adjustment (COLA) that was announced by the Social Security Administration (SSA) for 2025.
Inflationary pressures during the pandemic caused past increases that helped temporarily, but the small adjustment for 2025 is making people question whether it will be enough, especially since Medicare costs are going up and inflation is still high.
A Drop in Relief for Vulnerable Groups
Beneficiaries of Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), often among the most financially vulnerable, are particularly anxious.
Alongside the modest COLA, the increase in Medicare Part B premiums—about $10 monthly—will consume a significant portion of the average $50 monthly benefit rise. This leaves limited room for other essential expenses, exacerbating financial strain.
The Broader Impact of the COLA
According to research from the law firm Atticus, recipients are very worried. Three out of five disability beneficiaries were worried about their future financial stability, according to a study done before the COLA was announced.
Almost 60% of those who answered said they might look for other ways to make money, even if it meant risking their benefits and quality of life.
A lot of people were also unhappy with how COLA adjustments are calculated, according to the study. Most people (58%) think that COLAs should better reflect the cost of living. Almost half of those who answered wanted more money for housing and healthcare or a guaranteed minimum benefit level. These are not likely to be popular in Congress.
Darcy Milburn, director of Social Security and healthcare policy at The Arc of the United States, stressed the need for bigger changes. She said that old rules keep SSI recipients in poverty and punish them for reaching financial or marital milestones.
Perspectives on the COLA and Inflation
The lower COLA is seen by some experts as a sign of good economic trends. Cliff Ambrose, founder of Apex Wealth, says that lower inflation leads to smaller COLAs, which keep prices stable and cut down on the need for bigger benefit changes. “A smaller COLA might seem bad, but the lower inflation that comes with it makes retirees’ money go further,” he said.
But advocacy groups and beneficiaries are still not convinced. Shannon Benton, executive director of the Senior Citizens League (TSCL), called for a minimum COLA of 3% to make sure that retirees can live on their own money.
Financial Pressures Mount for Retirees
Amid rising concerns, a poll conducted by The Motley Fool on October 11 revealed that half of the 2,000 American retirees surveyed are considering reentering the workforce to supplement their incomes.
The debate over the adequacy of COLA adjustments underscores a broader challenge: balancing inflation control with ensuring financial stability for millions of Americans who depend on Social Security benefits. As Congress continues to debate reforms, beneficiaries are left navigating an uncertain financial future.
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