Impact of Flawed Social Security COLA Calculation on Retirees’ Buying Power
The Social Security Cost-of-Living Adjustment (COLA) Forecast for 2025 Exposes a Flaw That May Shock Retirees
Social Security benefits have (arguably) lost buying power over the last decade due to a flaw in the way cost-of-living adjustments (COLAs) are calculated. Social Security benefits got a 3.2% cost-of-living adjustment (COLA) in 2024, a smaller raise than the historic 8.7% COLA doled out in 2023. Unfortunately, retired workers are on pace to get an even smaller pay bump of 2.6% in 2025, according to The Senior Citizens League, a non-profit advocacy group.
What makes that steady decline surprising?
- Many seniors are facing financial hardships.
- The 2023 Retirement Confidence Survey reported that 58% of retirees are concerned they will have to make substantial cuts to their spending due to inflation.
- The 2024 RCS found that 26% of retirees lack confidence in their ability to finance retirement, with inflation being the most common reason for that lack of confidence.
Are Social Security benefits actually keeping pace with inflation? The 2025 COLA forecast exposes a flaw in the way COLAs are calculated that may shed light on the situation.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.