Social Security checks are going to change forever in 2025. Unfortunately, life for retirees is not going to get that much better

The Social Security Cost of Living Adjustment (COLA) for 2025 was much anticipated, but many recipients are left wondering how they can manage with the meager increase after the 2.5% increase was revealed in October.

Since the 2024 increase was swiftly overtaken by inflation in the first half of the year, many beneficiaries are worried that the 2.5% increase will experience the same fate—and even sooner—as the previous increases, which were significant after the pandemic and were caused by high inflation rates, did help those in need to afford their lifestyle.

The most vulnerable and in need of the most support are those who receive Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Their financial worries have been made worse by the roughly $10 increase in Medicare Part B premiums for 2025. Even though the average benefit increase is less than $50, coverage will be greatly impacted by the higher Medicare cost. There is not much left over to pay for all the other rising costs.

The real impact of the COLA on Social Security benefits

Three out of five disability recipients expressed anxiety about their future financial security after learning of the anticipated raise, which turned out to be true, according to a study by the law firm Atticus that was done prior to the COLA announcement in October. There is a difficult balance because over 60% of people on disability benefits are thinking about getting another source of income to lessen the burden, yet doing so could interfere with their payments and lower their quality of life.

According to the report, almost 58% of participants think that COLA hikes ought to more accurately reflect living expenses.A better index has not yet been implemented by Congress, despite earlier proposals. Furthermore, 45% of participants support a minimum guaranteed benefits level for financial stability, and 49% of participants think the SSA should offer additional financial assistance for necessities like housing and healthcare. actions that are not likely to be approved.

There is no question that SSI benefits should be raised, according to Darcy Milburn, director of Social Security and health care policy at The Arc of the United States. Outdated laws that penalize SSI recipients for getting married, keep them in poverty, hinder their ability to find work, and reduce their financial independence should be updated by Congress.

Some analysts, like Cliff Ambrose, the founder and financial manager of Apex Financial, maintain an optimistic outlook on a low COLA, contending that although it may initially appear to be a negative thing, the declining inflation is actually a positive thing. Retirees require a greater COLA during periods of high inflation in order to offset rising expenses for utilities, groceries, and medical care. Retirees might not need as big of an adjustment to maintain their purchasing power, though, as prices level off as inflation declines. A smaller COLA suggests that retirees’ cash will go farther since price rises will be less, even though Social Security benefits may increase less.

According to TSCL executive director Shannon Benton, Congress ought to move right now to fortify COLAs and guarantee Americans can retire with honor, which includes enacting a minimum COLA of 3%.

On October 11, the day after the news, The Motley Fool conducted a survey of 2,000 American retirees and found that half of them are thinking of quitting retirement in order to increase their income.

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