According to Vibes.okdiario, In sunny Pensacola, Florida, 82-year-old Sherri Myers faces ongoing financial difficulties. Despite the Social Security cost-of-living adjustment (COLA) expected in January, she remains skeptical about its ability to ease her financial burdens. “It won’t make a dent,” Sherri shares, as she struggles to cover her everyday expenses.
Like many retirees, Sherri voices a familiar concern: “Inflation has eaten up my savings.” Without much of a financial safety net, she finds herself in a precarious position. Even with the upcoming COLA, she is actively seeking work to supplement her income, which currently includes a modest pension alongside her Social Security benefits.
Impact of the Social Security COLA Increase
For 2025, around 70.6 million Social Security recipients are preparing for a smaller COLA than in recent years. This adjustment comes as inflation has shown signs of easing. The Social Security Administration will announce the official COLA on Thursday, with analysts forecasting a modest 2% increase.
Retirees like Sherri are worried about whether the COLA will be enough to keep up with the rising cost of living.
- Inflation has significantly impacted savings, leaving many retirees with less financial security.
- The need to seek additional income sources is becoming a common reality for seniors.
As more retirees face these financial challenges, questions regarding the effectiveness of Social Security adjustments continue to arise.
In 2025, Social Security benefits are projected to increase by a modest 5%. In contrast, recipients experienced a 3.2% increase in 2024, following a significant 8.7% boost in 2023, due to the highest inflation rates seen in decades.
The Financial Challenge Ahead
The AARP expects that a 2.5% COLA for 2025 will raise the average retiree’s monthly benefit by $48, bringing the total to approximately $1,920.
AARP Senior Vice President of Government Affairs, Bill Sweeney, acknowledges, “Many seniors will feel this is not enough to keep up with rising prices.” However, he adds that the smaller adjustment indicates a moderation in inflation, offering some positive news.
This announcement comes at a critical time for Social Security, as the program faces a looming financial crisis. According to the annual Social Security and Medicare trustees report from May, the trust fund could be unable to sustain full benefit payments starting in 2035. If depleted, the government may only be able to cover 83% of scheduled benefits.
Funding Social Security
Social Security is primarily funded through payroll taxes, paid by both workers and employers. For 2024, the maximum earnings subject to these taxes increased to $168,600, up from $160,200 in 2023. Analysts expect this figure to rise to $174,900 in 2025.
Political Proposals on Social Security
As Social Security’s financial future becomes a key campaign issue, political leaders have offered competing solutions.
- Vice President Kamala Harris supports raising taxes on “millionaires and billionaires” to help secure the program’s long-term sustainability.
- Former President Donald Trump has also proposed measures to protect and strengthen Social Security.
As retirees like Sherri navigate these financial hurdles, the future of Social Security and the adequacy of its COLA increases remain at the forefront of national discussions.
