Despite recent government inflation data indicating a decline in inflation rates, many retirees continue to face financial pressure due to rising costs. The Social Security cost-of-living adjustment (COLA) for next year may offer limited relief, with projections suggesting a 2.6% increase for 2025, as noted by Mary Johnson, an independent analyst specializing in Social Security and Medicare policy. This is a decrease from the 3.2% increase beneficiaries experienced in 2024 and significantly lower than the 8.7% increase granted in 2023 and the 5.9% increase in 2022. If realized, the anticipated COLA for 2025 would be the smallest since 2021, although it aligns with the average adjustments over the last twenty years.
It is important to recognize that the estimate for the 2025 COLA is not final and may be modified as new data is released. The annual adjustment is determined based on third-quarter information from a specific segment of the consumer price index called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration typically announces the COLA for the upcoming year in October.
Many older Americans report feeling the ongoing impact of increased living costs. A recent AARP survey revealed that over half of adults aged 50 and older, specifically 61%, are concerned about having sufficient funds for retirement. Additionally, 37% of respondents express anxiety regarding their ability to cover essential expenses like food and housing, while 70% fear that prices may escalate quicker than their income increases.