Social Security COLA Is Expected to Increase Next Year, But Retirees Could Still Struggle

The Social Security cost-of-living adjustment (COLA) is projected to be higher next year, but benefits still might not be enough for many older Americans to live off.

Each year, the Social Security Administration adjusts benefits based on inflation. This year’s COLA was a 2.5% increase. While the official numbers aren’t released until the fall, The Senior Citizens League predicts the increase for next year will be even higher at 2.7%.

Retirees received an average of $2,006.69 in benefits during July. A 2.7% COLA would raise that average monthly check by roughly $54.

TSCL estimates that nearly 22 million seniors live solely off their Social Security benefits. However, Consumer Expenditure Surveys (CES) data show that the average retired household spends approximately $5,000 per month on necessities. (This is based on data collected on 2023 spending and is the most recent available.)

A new survey from Nationwide revealed that 55% of current Social Security recipients said their benefits don’t cover their basic retirement needs. Additionally, 63% said they believe continually rising tariffs will drive inflation beyond what the COLA will cover.

Investopedia asked Shannon Benton, the executive director of TSCL, for her thoughts on the estimated COLA. This interview has been edited for brevity and clarity.

INVESTOPEDIA: Do you believe persistent inflation could outweigh a potential increased COLA?

SHANNON BENTON: Yes, 100%. Anyone who is going to the grocery store knows the price of things has increased by more than 2.7%. 

The other main problem with this is that the Medicare Part B premium is also expected to go up, which may wipe out the entire benefit of COLA [for some people], making it so they never even see that adjustment.

[Medicare Part B premiums are automatically taken out of Social Security benefits before a recipient receives their checks.]

INVESTOPEDIA: What is the importance of having a COLA that accurately reflects the changing economy?

BENTON: A 2.7% adjustment is better than nothing, but Congress could do more. Social Security recipients deserve more that keeps up with actual inflation. Inflation persistence over the last several years has been particularly tough for seniors.

Many Social Security beneficiaries rely solely on their benefits and they know they can’t make ends meet. They have to decide: What am I going to give up this month? Is it going to be beef? Am I going to have to cut my pills in half so I don’t have to get my prescriptions filled for another two weeks? 

INVESTOPEDIA: What are your hopes for the future of Social Security?

BENTON: We’re less than 10 years away from Social Security not being able to make 100% of its payments, and yet, there is no comprehensive reform introduced yet.

When they can’t pay out full Social Security benefits, that’ll be an across-the-board cut. TSCL is very concerned that Congress is going to wait until the last minute to make changes and they will be abrupt for millions of seniors. 

Simply, Congress needs to act to fix it now, not later.