Despite recent government data indicating a drop in inflation, many retirees continue to face financial difficulties due to elevated living costs. The Social Security cost-of-living adjustment (COLA) for 2025 is projected to be just 2.6%, according to Mary Johnson, an independent analyst focused on Social Security and Medicare policies. This adjustment is a decrease from the 3.2% increase that retirees received in 2024 and significantly lower than the 8.7% increase from 2023 and the 5.9% adjustment from 2022. If realized, the 2025 COLA would mark the lowest adjustment since 2021, although it aligns with the average adjustments over the past twenty years.
It’s important to note that this estimate may change, as the COLA is determined by third-quarter data from a specific segment of the consumer price index, known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As fresh CPI data is released, the finalized COLA amount may be adjusted. The Social Security Administration typically announces the official COLA for the upcoming year in October.
Additionally, a recent AARP survey reveals that a significant number of older adults—61% of those aged 50 and above—express concern about having sufficient funds for retirement. Inflation remains a pressing issue, with 37% of respondents worried about being able to meet basic expenses like food and housing. Furthermore, 70% of those surveyed fear that price increases will outpace their income.