Los Angeles, CA – Social Security recipients are anticipating the announcement of the 2025 COLA (cost-of-living adjustment), with expectations that it may be less generous than the 3.2% increase received in 2024. The disappointment stems from the fact that the 2023 COLA was a substantial 8.7%, leaving seniors hoping for a more significant raise this time around.
Experts initially projected a meager 1.75% COLA for 2025, causing concern among beneficiaries who rely on these adjustments to maintain their purchasing power. While this estimate has since been revised upwards, the final percentage remains uncertain until the release of third-quarter inflation data.
Over the years, COLAs have varied widely, with some years experiencing no adjustment at all. During the period from 2000 to 2020, there were three instances where Social Security recipients did not receive any COLA. Despite the uncertainty surrounding the upcoming 2025 adjustment, it is unlikely to be the lowest on record.
Given the reliance of many seniors on Social Security income, financial experts advise against becoming overly dependent on COLAs for financial stability. Building independent savings for retirement provides a safety net in case of minimal or zero adjustments to Social Security benefits.
Investing in retirement accounts over a long period can significantly boost savings and provide additional income alongside Social Security benefits. By taking steps to save independently, retirees can mitigate the financial impact of a modest COLA or lack thereof in any given year.
While seniors await the official announcement of the 2025 COLA in October, the importance of diversifying income sources beyond Social Security cannot be overstated. With proper planning and savings strategies, retirees can better prepare for the uncertainties of annual cost-of-living adjustments and ensure financial security in retirement.