The projected 2025 Social Security cost-of-living adjustment (COLA) might be higher than it was predicted in January, but many beneficiaries are still questioning whether it is enough as they face inflation on everyday living expenses.
Each year, Social Security payments change based on the annual COLA, which looks at inflation in the Consumer Price Index (CPI). Seniors and those living with disabilities who earn Social Security payments saw their checks grow by up to 8.7 percent in 2023. In 2024, payments grew by a lot less, with just a 3.2 percent COLA. That amounted to a roughly $50 increase for most beneficiaries.
Headed into 2025, seniors and Americans with disabilities were expecting a COLA of just 1.75 percent based on January estimates. A new prediction from the Senior Citizens League sets the 2025 COLA at 2.4 percent, but that hasn't done much to calm beneficiaries' concerns about the monthly payments.
"You can sense the frustration among seniors when you walk into a grocery store," Alex Beene, a financial literacy instructor for the state of Tennessee, told Newsweek. "Some of the items most affected by inflation have been everyday purchases they weren't expecting to see steep price increases on during retirement."
Newsweek reached out to the Social Security Administration for comment via email.
The higher prediction comes after the CPI, which measures inflation on goods and services, climbed by 3.2 percent in February from the year previous. The core rate, however, surged by 3.8 percent, and the CPI for urban wage earners and clerical workers, from which COLA gets its percentage, grew to 3.1 percent.
Many seniors are frustrated that inflation continues to get worse on the things they routinely spend money on, particularly housing and health care. Shelter costs grew 5.7 percent year over year, with medical services gaining an uptick of 1.1 percent, according to the Bureau of Labor Statistics.
In a Senior Citizens' League survey from January, seniors said they were still facing price hikes on nearly all of their household goods. Nearly all (93 percent) senior respondents said their household expenses grew by more than $59 monthly in 2023, and 43 percent said monthly expenses climbed by more than $185.
This has some seniors nervous that the boost in Social Security payments won't be enough to cover any upcoming inflation. On top of that, many face additional taxes as they reach higher income tax brackets due to the increase in benefit checks.
Read more: 2023-2024 Tax Brackets and Federal Income Tax Rates
Roughly 25 million Americans over age 60 live at or below 250 percent of the federal poverty line, according to data from the National Council on Aging. Many of those same seniors rely on Social Security for the bulk of their living expenses.
Atticus, a legal help platform, found in November that 70 percent of single seniors are struggling financially, and 40 percent of seniors are considering reentering the workforce as inflation remains elevated.
"The increases are there, but there's a general feeling of them not being substantial enough, and it's easy to see why," Beene said. "The solution is a mixture of government and business. For satisfaction among seniors, it has to be a more sizable benefits increase paired with stubbornly high prices finally seeing declines."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Suzanne Blake is a Newsweek reporter based in New York. Her focus is reporting on consumer and social trends, spanning ... Read more
