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Seniors will receive only a small increase in Social Security benefits in 2025
Suffolk

Seniors will receive only a small increase in Social Security benefits in 2025



CNN

Social Security recipients will see their monthly payments increase by a few inches only 2.5% next year as the steady decline in inflation slows the program’s annual cost-of-living adjustment, the Social Security Administration said Thursday.

Retirees’ monthly payments will increase by about $50 starting in January, to an average of $1,976. Almost 68 million people receive social security contributions.

The announcement comes less than a month before the presidential election, where the economy and the high cost of living are voters’ top concerns.

Next year’s COLA is a far cry from the 8.7% adjustment for 2023, which was the highest in more than 40 years and was aimed at helping seniors and people with disabilities cope with rapid price increases at the time. Since then, however, annual increases have moderated along with inflation, leaving recipients with just a 3.2% increase this year.

The annual adjustment is based on a measure of inflation from the third quarter of the year, which has cooled after hitting about a four-decade high two years ago. A related measure, the consumer price index, rose 2.4% in September compared to last year, the Bureau of Labor Statistics announced Thursday.

Still, many seniors and their advocates say the annual adjustments are not keeping up with the rising cost of living, especially now that prices have remained high even as inflation has fallen.

Before the Covid-19 pandemic, Cindy Christina could buy four or five bags of groceries and household goods for $150 at Walmart. Now the Lebanon, Oregon resident is lucky if she can get two bags for that amount.

Christina, a retired medical transcriptionist, and her husband Wally rely on Social Security to pay their bills. When they recently had to replace the brakes on their 1996 Dodge, they had to cover the cost and postpone a nerve test on Christina’s wrist.

Cindy and Wally Christina say their expenses have increased faster than their annual Social Security COLA.

Meanwhile, recent COLA increases failed to keep up by a few percentage points.

“This is nothing compared to how much grocery shopping has increased,” said Christina, 67, who usually eats cereal for dinner to save money. The annual adjustment “sounds good on paper, but it doesn’t help us at all.”

Although the COLA is intended to keep pace with inflation, it has missed the mark in eight of the last 15 adjustments, according to a recent analysis by the Senior Citizens League, an advocacy group that examined annual increases ahead of the 2025 one.
Over the past five years, only the 2023 adjustment has exceeded the inflation rate. In other years, COLAs lagged inflation by up to 1.1 percentage points.

According to the league, Social Security benefits have lost 20% of their purchasing power since 2010. Those who retired this year would need a boost of $370 per month, or an average of $4,440 per year, to recoup the lost value.

“The automatic annual cost of living adjustment is one of Social Security’s most essential and unique features. It is designed to ensure that benefits do not diminish over time,” Nancy Altman, president of Social Security Works, an advocacy group, said in a statement. “However, the formula currently used to calculate annual COLAs under-measures the expenses incurred by Social Security recipients. Seniors are spending more of their income on medical expenses – and the Social Security COLA should reflect that.”

In addition, seniors generally do not receive full compensation. Medicare Part B premiums, which are automatically deducted from monthly Social Security benefits, can wipe out the annual increase. According to the latest report from the Medicare trustees, the standard monthly premium for 2025 is expected to be $185, an increase of more than $10 from this year.

Until a few years ago, Mary Richards was able to cover her monthly expenses with income from Social Security and her pension – and still had some left over to go out to eat and put some money aside. But ever-increasing costs forced her to dip into her savings to pay larger bills, such as her property taxes and insurance on her home and car.

“Now there’s just no wiggle room,” said Richards, 76, a retired design professor who lives in The Villages, Florida. “I kind of woke up one day and said, ‘I don’t have any money left.'”

For example, the food she buys for her 7-year-old rescue dog, Lucky, now costs $1.82 a can at Walmart, up from 75 cents before the pandemic — and Lucky eats 2.5 cans a day. She wonders how the Social Security Administration calculates the COLA because “it doesn’t seem to be based on what I’m paying for.”

Tom Wakely, who moved from San Antonio, Texas, to Deming, New Mexico three years ago, tries to stay away from the grocery store as much as possible. A retired community organizer, he and his wife Norma Gomez grow vegetables, bake bread and brew beer in their garden and in a hydroponic system.

Tom Wakely grows his own vegetables to keep costs down.

When asked what he thought of the annual adjustment, he laughed.

“I’m looking forward to the extra $20 a month,” said Wakely, 71. “It’s not noticeable because everything else is going up.”

This story has been updated with additional information.

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