The United States’ Social Security retirees face an uncertain future in the year 2025, as the cost of living adjustment, known as COLA, will be lower than in the previous three years. These adjustments are automatic and are designed to help these people who depend on retirement or disability income to maintain their quality of life and their purchasing power.
Without the COLA increase, purchasing power is gradually eroded in the face of inflation, making it difficult for these beneficiaries to pay for essential goods and services to maintain a good quality of life, such as food, housing and medical care.
The COLA adjustment is calculated based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) The Social Security Administration takes data from the third quarter of one year to the third quarter of the following year.
The most recent CPI-W calculation indicated that an increase of 3.2% was expected in the first quarter of 2023, which then generated a cola increase of 3.2% for Social Security beneficiaries, to be applied in 2024.
This Is Bad News for Social Security Retirees and Beneficiares
The COLA adjustment for the coming year, that is, 2025, does not look promising and retirees and Social Security beneficiaries are already worried. According to the Seniors Citizens League, it is highly likely that the COLA for 2025 will be just 2.6%, the smallest increase in the last 4 years.
Just as we said before, the idea of the COLA is to ensure that Social Security and SSI beneficiaries maintain their income with the rhythm of the cost of living increase and inflation, the adjustments usually take effect in January of each year, but Social Security announces the amount in the previous fall. That means that it is possible that between the announcement in autumn and the month of January, the beneficiaries have already lost a certain percentage compared to inflation. No matter how small, when income is limited, every extra dollar counts.
Learn More: Social Security Payment of $4,873 Delivered to Selected Beneficiaries
Are Social Security and Medicare in Danger?
Another important concern that afflicts the beneficiaries of Social Security, and also of the Medicare program, is to know when the funds of these two programs so beloved by Americans will run out.Recently, the United States Department of the Treasury released a report with annual figures for the Social Security and Medicare trusts.
And although there were small improvements in the financial status of these programs, doubts still persist: officials said in the report that Social Security is likely to deplete its reserves from the Old-Age and Survivors Insurance (OASI), and this would mean that they would run out of funds in 2033.
Despite this bad news, which is similar to the one presented in 2022, it is expected that the Disability Insurance (DI) Trust Fund can pay 100% of the total benefits, at least until the year 2098.
If the disability insurance (DI) trust fund is combined with the OASI fund, the resulting projected fund could pay 100% of the total scheduled benefits up to 2035, one year later than reported in the last report.