After hearing about the 2.5% cost-of-living adjustment (COLA) increase in October, a lot of people started to figure out their new Social Security checks to see how much, if any, they would help their funds. The results were not good.
The CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) and inflation numbers from the third quarter of the year were used to figure out the rise. By that time, steps had been taken to lower inflation, and the number was low, which should be a good thing.
Lower inflation and thus a lower COLA indicate that the economy is stabilising and that prices will not continue to rise, but it also implies that retirees will have less money to pay previously increasing expenses.
For individuals who wish to know how much advantages will rise with the cola, the following table may be useful:
| AGE | Current Average Retirement Benefit | Retirement Benefit After COLA | Change in Monthly Social Security Benefit |
| 62 | $1,298.26 | $1,330.72 | $32.46 |
| 67 | $1,563.06 | $1,602.14 | $39.08 |
| 70 | $2,037.54 | $2,088.48 | $50.94 |
Whether or not the reduced rise is a good thing, many people are questioning the index used to determine it.
They say that the Consumer Price Index for Americans Aged 62 and Up (CPI-E), which measures how much older adults spend on things like food, housing, and consumer goods, is a better indicator of how inflation affects retirees than the CPI-W, which measures how much workers spend every day on things like food, housing, and consumer goods.
Shannon Benton, executive director of The Senior Citizens League (TSCL), is a proponent of the change, saying in a statement, “This year represents another missed opportunity to grant seniors the financial relief they deserve by changing the COLA calculation from the CPI-W to the CPI-E, which would better reflect seniors’ changing expenses.”
Seniors and TSCL want Congress to move quickly to improve COLAs so that Americans can retire with honour. For example, they want a 3% COLA and for the CPI-W to be replaced with the CPI-E.
Congressman John Larson (Connecticut) likewise voiced his agreement with the horrible impact of the modest COLA, but provided no insights into possible alternatives. “The annual COLA is vital for Social Security beneficiaries to make ends meet, but 2.5% is not nearly enough for seniors living on fixed incomes.”
The Social security COLA insufficiency a compounded issue
The problem doesn’t end with a COLA that isn’t enough; higher Medicare fees and costs will probably use up most of it. Most people who get Social Security pay their Medicare payments directly out of their benefits. When these costs go up, their benefits go down.
In November, the Centres for Medicare & Medicaid Services (CMS) revealed the 2025 rates for Medicare premiums, deductibles, and coinsurance, including revisions for Medicare Part A, Part B, and income-related monthly premiums for Medicare Part D. The rise is significant.
It will cost $10.30 more each month to get Medicare Part B in 2025, and the annual deductible will go from $240 in 2024 to $257 in 2025. This is only one part of the whole.
In the past few years, prices for many things have gone up, such as groceries, housing, and gas. This has forced seniors to use their funds to cover the difference between their benefits and their costs, putting many of them in dangerous situations.
Despite the fact that a lower COLA is beneficial since it implies prices would not rise as quickly, changes are made after the fact, and when they are as low as this one, they can make seniors feel as if they are drowning in bills with no end in sight.
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