Annual COLA is meant to keep beneficiaries’ purchasing power from being eroded by inflation. However, USA TODAY reported that this hasn’t been the case for many older Americans. Eighty-three percent of older adults said in August a COLA of less than 3% would be insufficient, according to an AARP survey of 1,000 adults ages 50 and older.
How Is COLA Calculated?
COLA is based on the percentage increase in the consumer price index for Urban Wage Earners and Clerical Workers from July through September of the last year as compared to the same three months of the current year. CPI-W tracks the overall inflation rate but can differ slightly.
In September, annual CPI-W rose 2.2% compared with a 2.4% overall inflation increase.
About 72.5 million people, including retirees, disabled people and children, get Social Security benefits. But even before the announcement, retirees voiced concern that the increase would not be enough to counter rising costs. Sherri Myers, an 82-year-old retiree from Pensacola City, Florida, is now hoping to get an hourly job at Walmart to help make ends meet.“I would like to eat well, but I can’t. When I’m at the grocery store, I just walk past the vegetables because they are too expensive. I have to be very selective about what I eat — even McDonald’s is expensive,” she said.
Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.
The Smaller Increase For 2025 Reflects Moderating Inflation.
Social Security Commissioner Martin O’Malley told The Associated Press that the upcoming increase will provide a measure of relief for recipients as inflation has cooled and the agency serves a record number of retirees while funding is at a historic low.
His message to those who feel that the adjustment is not enough: “They’re not wrong.”
”I’ve heard the stories, and it is a struggle for seniors,” he said, adding that “in their older years, they have to spend their money on a different array of costs and expenses, including prescription drugs.” He said policies advanced by the Biden-Harris administration should result in many people seeing lower prescription drug costs.
