Seniors may be in for a surprise next year when their Social Security benefits could increase by the lowest amount in four years, The Senior Citizens League (TSCL) recently warned.
Every year, Social Security payment amounts change based on the cost of living adjustment (COLA), which looks at the state of inflation and offers seniors a new monthly check based on that. For the past few years, Social Security payments have been skyrocketing due to inflation. While 2024 saw a COLA of 3.2 percent, seniors saw Social Security increases as high as 8.7 percent in 2023.
However, seniors shouldn't expect a similar uptick in 2025. Instead, TSCL said they can anticipate a COLA as low as 1.4 percent, which would be the smallest since 2021, which was 1.3 percent.
In December, inflation stood at 3.4 percent. If it continues to improve, the reduced increase could be troubling for seniors who have to pay higher than average costs for housing and hospital care.
"The Social Security COLA will be hurt by a slowing increase in the rise of inflation which will definitely impact retirees receiving Social Security," Kevin Thompson, a certified financial planner and the founder and CEO of 9i Capital Group, told Newsweek on Friday. "This will be detrimental to seniors because food prices are quite sticky at the moment and are not coming down."
The estimate for the 2025 COLA could change before the Social Security Administration (SSA) officially announces the adjustment in October, but seniors remain concerned about how this could affect their quality of life.
Newsweek reached out to the SSA via email for additional comment.
For the past 20 years, the COLA average has been 2.6 percent, so the predicted 2025 increase would be more than 1 percent lower than seniors have generally been used to.
Roughly half of seniors get at least 50 percent of their entire income from Social Security benefits, and 25 percent have to depend on the benefits for 90 percent of their income. One of the biggest challenges for those relying on Social Security may be their ability to cover health care costs, since those prices remain far higher than a 1.4 percent COLA would indicate, Thompson said.
"Health care cost continues to rise far outpacing inflation which is one of the largest costs for those receiving Social Security," he added. "Seniors will have to live off the COLA increase even though it will only have a mild benefit, and little to no impact against rising food and healthcare prices."
Soon-to-be seniors are already worried about the future of Social Security, as the SSA is set to face a 23 percent benefit cut in 2033 if no reform action is taken.
Even with this year's 3.2 percent COLA on Social Security checks, many seniors have been dissatisfied and forced into tough financial constraints.
Atticus, a legal help platform, found this past November that 70 percent of single seniors are struggling financially, and 40 percent of seniors are considering reentering the workforce as inflation remains high.
"About that 3.2 percent COLA increase for 2024, well, it sounds good on paper, but honestly it's not quite cutting it for seniors," Christopher Hensley, a financial adviser and the president of Houston First Financial Group, previously told Newsweek.
Because the COLA is based on the consumer price index, which doesn't adequately take into account health care cost changes, it's unlikely that your Social Security check will reflect the surging prices seniors are actually facing.
"While any increase in Social Security is generally good news, when it's this small and Medicare premiums are climbing, it's almost like taking one step forward and another back," Hensley said.
Uncommon Knowledge
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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
