Social Security in Trouble: Prepare for Smaller COLA Increases

Here’s why Social Security cost-of-living adjustments may be smaller in 2025 and beyond

With inflation moderating, Social Security cost-of-living adjustments (COLAs) are projected to decline in the future.

Retirees should consider taking steps to mitigate the impact of smaller monthly increases.

The annual increase in Social Security benefits, calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), is likely to be 2.4% in 2025.

This is significantly lower than the recent high COLAs of 8.7% in 2023 and 5.9% in 2022.

To protect their income, retirees should consider saving extra money, as interest rates on cash savings are still high.

They should also consider limiting their fixed expenses and exploring ways to cut and save.

Those who have investment income can use it to supplement their income.

Annuities can also provide a source of fixed income in retirement.

Retirees considering annuities should consult with a financial advisor to determine if they are a suitable option and to find the best deal.

Retirees with lower incomes may find helpful information from local senior centers and other community resources.

By planning and taking these steps, retirees can prepare for lower COLAs and ensure their financial security in retirement.