Many people started to figure out their new Social Security benefits after the 2.5% cost-of-living adjustment (COLA) increase was announced in October. They did this to see how much, if any, it would help their finances, but the results have not been good.
The Consumer Price Index (CPI-W) for Urban Wage Earners and Clerical Workers and inflation data from the third trimester of the year were used to figure out the rise. By that time, steps had been taken to slow down inflation, and the number was low, which should be a good thing.
As a result, lower inflation and a lower COLA mean that the economy is stabilising and prices won’t keep going up. However, retirees will have less money to pay for their already higher costs.
The table below might help people who want to get an idea of how much the cola will boost the benefits:
| AGE | Current Average Retirement Benefit | Retirement Benefit After COLA | Change in Monthly Social Security Benefit |
| 62 | $1,298.26 | $1,330.72 | $32.46 |
| 67 | $1,563.06 | $1,602.14 | $39.08 |
| 70 | $2,037.54 | $2,088.48 | $50.94 |
Many people don’t agree with the index that was used to figure out the smaller increase, even if it is a good thing.
Some people say that the Consumer Price Index for Americans aged 62 and older (CPI-E), which measures the costs that older adults face, is a better indicator of inflation than the Consumer Price Index for Workers (CPI-W), which measures everyday spending on things like food, housing, and consumer goods for workers.
Shannon Benton, executive director of The Senior Citizens League (TSCL), is in favour of the change. In a statement, she said, “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.”
Seniors and TSCL want Congress to act right away to strengthen COLAs so that Americans can retire with honor. For example, they want a minimum COLA of 3% and for the CPI-W to be used instead of the CPI-E to calculate COLAs.
Congressman John Larson (Connecticut) also said that he agreed that the small COLA had a terrible effect, but he didn’t offer any ideas for how to fix the problem. “The annual COLA is important for people who get Social Security to be able to pay their bills, but 2.5% is not nearly enough for seniors who live on fixed incomes.”
The Social security COLA insufficiency a compounded issue
Not having enough of a COLA is only part of the problem; higher Medicare premiums and deductibles will likely take most of it. Most people who get Social Security pay their Medicare premiums directly out of their checks. When these costs go up, their checks get smaller.
In November, the Centres for Medicare & Medicaid Services (CMS) announced the rates for Medicare premiums, deductibles, and coinsurance for 2025. These rates include changes for Medicare Part A, Part B, and the income-based monthly premiums for Medicare Part D. The increase is big.
If you have Medicare Part B, your monthly premium will go up by $10.30 to $185.00 in 2025, and your yearly deductible will go up by $17, from $240 in 2024 to $257 in 2025. This is only a part of it.
As of late, many prices have gone up, including those for groceries, housing, petrol and other things. As a result, many seniors have had to use their savings to cover the difference between their benefits and their costs, which has put many of them in a tough spot.
Even though a lower COLA is good because it means prices won’t go up as quickly, the changes are made after the fact, and when they are this low, they can make seniors feel like they are drowning in costs with no way out in sight.
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