In 2025, Social Security recipients will see a small bump in their monthly checks—about $48 more, thanks to a projected 2.5% Cost of Living Adjustment (COLA). On paper, this might sound like good news, especially after a few rough economic years. But many retirees aren’t celebrating. For them, the increase barely scratches the surface of what they need to cover rising costs of essentials like housing, healthcare, and energy.
COLA
The COLA is meant to help retirees keep up with inflation. Every year, it’s calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the prices of typical goods and services. But here’s the catch: this index doesn’t really reflect how seniors spend their money. Most retirees spend more on healthcare than the average working adult, and those costs have been climbing fast.
Let’s look at the numbers:
| Key Data | Details |
|---|---|
| Monthly Increase | $48 for the average retiree |
| 2025 COLA | Estimated at 2.5% |
| Current Benefit | $1,907/month |
| Medicare Part B | Expected to rise $10.30 |
| Affected Population | 70 million people |
| Elder Poverty | 49.6% struggle to meet basic needs |
Now compare that $48 bump to what retirees actually spend. It’s barely enough to cover a few extra bags of groceries or a small part of a medical bill.
Frustration
Many seniors are frustrated because the COLA formula seems out of touch. Sure, inflation may have eased a little from 2023’s peak, but the costs that matter most to older adults—like rent, medications, and utilities—are still climbing.
A big sticking point is Medicare Part B. In 2025, premiums are expected to rise by $10.30 per month, bringing the total to around $185. And since these premiums are usually deducted directly from Social Security checks, that means a big chunk of the $48 COLA is gone before retirees even see it.
Realities
Let’s break it down with a real-life example. Take Susan, a 71-year-old from Virginia. Her main income is Social Security. She already spends $300 a week on groceries and has been cutting corners by relying on venison her husband hunts. Between rising electric bills, vet costs for her pets, and home maintenance, that $48 COLA might help for one week—but it won’t fix the bigger issue of her shrinking budget.
Now imagine Susan’s story repeated across millions of households. Many seniors don’t have pensions or additional savings. They’re living entirely off Social Security and maybe a small retirement fund. When essential items keep rising in price, a 2.5% bump just doesn’t cut it.
Formula
So what’s the solution? Advocacy groups have long pushed for a change in how COLA is calculated. Instead of CPI-W, they want Social Security to use the Consumer Price Index for the Elderly (CPI-E). This index focuses more on the spending habits of older adults and could provide fairer annual adjustments.
Switching to CPI-E might mean slightly larger COLAs in years where medical and housing costs rise sharply. It’s not a perfect fix, but it’s a step toward addressing the real financial struggles retirees face today.
Gap
Here’s the hard truth: nearly half of Americans over 60 can’t meet their basic needs with their current income. That’s 49.6% of older adults, according to the National Council on Aging. So, even though the COLA increase makes headlines, the day-to-day reality doesn’t change much for millions of seniors.
For many, it’s not about getting ahead—it’s about keeping up. And the current system just isn’t enough.
