In 2025, Social Security checks will see a modest boost of about $48 per month, thanks to a 2.5% Cost of Living Adjustment (COLA). At first glance, this seems like positive news for retirees.
However, many beneficiaries feel that the increase is insufficient for coping with rising expenses in essentials such as healthcare, housing, and groceries.
This frustration has prompted calls to reform the COLA formula to better match retirees’ actual spending patterns, which are often different from those of working-age Americans.
Increase
The COLA increase for 2025 will mean an extra $48 per month for the average retiree. While this sounds like a helpful addition, retirees argue that it doesn’t truly meet their financial needs.
The cost of essentials like healthcare, groceries, and utilities continues to rise, often outpacing the modest increase in Social Security. This COLA boost, though welcome, doesn’t stretch far enough to cover the living expenses seniors face, leaving many struggling to afford basic necessities.
| Key Data | Details |
|---|---|
| Average Monthly Increase | $48 per month for retirees |
| 2025 COLA Percentage | 2.5% |
| Average Monthly Benefit | $1,907 |
| Medicare Part B Increase | $10.30/month |
| Affected Population | 70 million beneficiaries |
| Elder Poverty Rate | 49.6% of seniors struggle |
COLA
The Social Security COLA is an annual adjustment designed to help benefits keep up with inflation, using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the amount. However, this index primarily tracks the spending patterns of working-age households, not retirees.
Over recent years, the COLA percentage has fluctuated. For example, in 2023, beneficiaries saw an 8.7% increase, the largest in decades, while the 2025 adjustment is only projected at 2.5%.
Though inflation has cooled somewhat, costs for necessities remain high. Retirees feel the CPI-W does not account for their expenses—especially as healthcare costs for seniors rise faster than general inflation.
Concerns
Rising Healthcare Costs
One of the biggest concerns for retirees is the increase in healthcare expenses. In 2025, Medicare Part B premiums are expected to increase by $10.30, bringing the average premium to $185 per month.
For many, these premiums are deducted directly from Social Security payments, meaning the COLA boost is partly offset by healthcare costs.
This leaves retirees with little to no real increase in their disposable income, as they still need to cover out-of-pocket healthcare expenses, including medications, treatments, and procedures not covered by Medicare.
Rising Costs of Essentials
Housing, food, and utility costs remain high for retirees, who often spend a significant portion of their income on these essentials. For example, utilities and grocery bills have remained steady or increased, despite overall inflation declines.
Retirees on fixed incomes find it challenging to keep up with these expenses, which don’t reflect the modest 2.5% increase in Social Security benefits.
Inadequate COLA Formula
The current COLA calculation does not align with the spending habits of retirees, which tend to include higher healthcare and housing costs.
Many seniors and advocates argue for switching to the Consumer Price Index for the Elderly (CPI-E), which would likely yield higher increases better suited to seniors’ needs. The CPI-E emphasizes expenses like healthcare, housing, and other essentials that are primary budget concerns for retirees.
Real-Life Impact
Consider Susan, a 71-year-old retiree in Virginia who depends almost entirely on her Social Security benefits. Susan’s expenses include nearly $300 per month in groceries, plus increased utility bills and home maintenance costs.
While she appreciates the $48 increase, she finds that it barely covers the increased expenses, let alone leaves her with any extra. Susan’s story mirrors the experience of many retirees, who find that each year’s COLA adjustment simply doesn’t stretch far enough.
For seniors relying on Social Security as their primary income, the COLA often fails to keep pace with rising costs. They continue to feel financially strained, even with the small annual increases.
In essence, the 2025 Social Security increase, though technically an improvement, feels like a missed opportunity for retirees. Many are advocating for reform in how COLA is calculated, hoping for adjustments that more accurately represent their financial needs. The additional $48 per month is a positive step, but it’s not enough to keep up with the expenses that impact retirees the most.
