2025’s 2.5% Social Security Boost: Will It Really Help Retirees Keep Up with Rising Costs?

In 2025, Social Security recipients will see a 2.5% cost-of-living adjustment (COLA) to help keep up with rising costs.

Read: Get Ready for a Boost: Why the 2025 Social Security COLA Could Make a Big Difference

However, with the recent decline in inflation, this smaller increase may not be enough to cover retirees’ true expenses.
 

Why 2.5% May Not Be Enough

Over the years, Social Security benefits have lost roughly 36% of their buying power, according to the Senior Citizens League.

The COLA calculation currently uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which doesn’t fully reflect costs seniors face, especially in healthcare.

Using a more targeted index—like the Consumer Price Index for the Elderly (CPI-E)—could better address seniors' needs, but until then, retirees may still feel the squeeze.

Learn more about how COLAs are calculated from the Social Security Administration.
 

Practical Steps for Retirees to Protect Their Finances

Here are a few effective ways to stretch your income and reduce financial strain:

1. Increase Income Through Part-Time Work
   The gig economy offers many flexible options for retirees. For work ideas tailored to seniors, visit USA.gov.

2. Downsize or Relocate to Lower Living Costs
   

   Moving to a smaller home or a more affordable area can help extend your budget. The Department of Housing and Urban Development has resources on affordable housing for seniors.

3. Tap into Government Assistance Programs
   Programs like SNAP, Medicaid, and property tax relief are designed to assist retirees. Use Benefits.gov to find programs you may qualify for:

   • For Medicaid eligibility, go to Medicaid for seniors.
   • To check food assistance eligibility, visit SNAP eligibility.

 

Make the Most of Social Security Benefits

Delaying Social Security benefits beyond full retirement age can increase monthly payments, potentially providing a significant boost over time.

To learn more about benefit timing, visit the SSA’s Retirement Benefits page.

A 2.5% COLA for 2025 may not fully cover rising costs for retirees, but taking steps to increase income, reduce expenses, and maximize benefits can help bridge the gap.

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