Daily Money - Retirees Will Get a Raise in 2025

If you’re curious just how expensive life in America has become, look no further than the Social Security Administration’s cost-of-living adjustment (COLA), which will increase payments in the new year.

In 2025, retirees collecting Social Security benefits will be given a 2.5% COLA. And with the average payment coming in at about $1,900, this could be a welcome boost. However, it represents the lowest increase in benefits since 2020, at a time when inflation was a more manageable 1.2%. 

So is a 2.5% COLA enough for older Americans who’ve left the workforce and rely on fixed income to keep apace with inflation? Not quite.

After the Consumer Price Index (CPI) hit 2.4% in September — its lowest reading since February 2021 — inflation has been slowly climbing. Last month, the CPI print came in at 2.7%, meaning that even if inflation remains flat in December (which we’ll find out in January), the COLA is already trailing the CPI heading into 2025. 

That’s bad news for retirees’ purchasing power. And while gas prices have fallen, consumer staples are again on the rise. Specifically, groceries: Since November 2023, the cost of nonalcoholic beverages is up 2.8% and meats, poultry, fish and eggs costs have risen a collective 3.8%.

So if you’ve already retired or plan to do so in 2025, the good news is that you’ll be getting a raise. However, that might not be enough to offset costs if they continue to rise. What can you do about it? Visit Money’s retirement hub to learn strategies you can embrace to help fortify your retirement plan.

The National Retail Federation has found the tariffs proposed by President-elect Donald Trump could result in American consumers’ spending power being diminished by as much as $78 billion for each year the tariffs are in place.

Traditional health insurance and Medicare often have limited coverage for long-term care. This means you or your loved ones could face substantial costs should you require in-home care or assisted living. Long-term care insurance may provide a crucial safety net by offering coverage for these services. However, it’s important to act early, as typically the likelihood of denial or policy limitations increases with age.

Check out Money’s list of the Best Long-Term Care Insurance Providers today.

ADVERTISEMENT

• 💼 With Dwindling Retirement Savings, Older Americans Are Back on the Job Market
• 🏦 The IRS Says This Group of Americans Can Get Paid to Save for Retirement
• % Forget the 4% Rule: Consider This Number for Retirement Withdrawals