As many senior citizens look ahead to financial planning for 2025, two main concerns persist: the fate of Social Security in general and how the 2025 Cost of Living Adjustment (COLA) will impact payment buying power.
Inflation has steadily declined this year, prompting the Social Security Administration to issue the lowest COLA since 2020.
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Historically, a 2.5% increase in Social Security payments has been relatively standard to keep pace with inflation. However, with high consumer prices lingering, many seniors are worried this COLA won’t offset the rising cost of living.
Retirees are now reporting dissatisfaction with next year’s COLA, and some are considering alternative ways to supplement their Social Security income.
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COLA may not be enough for seniors in 2025
Over the past ten years, Social Security COLAs have averaged 2.6%, making the 2025 adjustment in line with previous years. However, it is markedly lower than the 8.2% in 2022 and 3.4% in 2023.
The maximum amount beneficiaries of full retirement age — between 66 and 67, depending on birth year — can receive will increase to $62,160. However, the maximum earnings for those below full retirement age will increase to $23,400.
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Social Security checks will increase an average of $50 per month next year. Still, many seniors believe this increase doesn’t accurately reflect the skyrocketing costs of essentials like housing, food, and healthcare.
A November 2024 Fractl survey found that nearly all (96%) seniors believe that the scheduled 2.5% COLA is insufficient, and the preferred adjustment amount is 11.5% on average among retirees. With a potential retirement income gap on the horizon, many seniors are considering entering the workforce.
Retirees are now considering "side hustles" (35%) and part-time employment (24%) to make ends meet during their golden years. This indicates that retirees increasingly find their retirement savings and Social Security payments inadequate, a trend that may only worsen over the next decade as the program's future remains uncertain.
Social Security's future is unknown
Earlier this year, the Social Security Board of Trustees announced that the program was on track to become insolvent by 2033 unless a $140 trillion liability was addressed. If this timeline is accurate, Social Security payments would only cover 79% of their original benefits.
Related: Dave Ramsey reveals blunt new Social Security payment warning
The Trump administration has already indicated that funding should be cut for several key government agencies, and one of particular interest is the Social Security Administration.
Though primarily funded by a trust created by decades of workforce income taxes, the administration also receives funding from Congress. In 2024, the Social Security Administration received $1.6 trillion across all its departments.
The Trump administration is expected to expedite Social Security's insolvency by several years—some estimates say the program will face challengesby 2031 —making its viability a major concern for retirees and workers.
These predictions fuel uncertainty for seniors: almost half (43%) don’t believe Social Security will provide stable income over the next decade. And 66% of retirees are worried about how political decisions will affect the program's future.
Americans of all ages will have to watch the Trump administration’s plan of action to understand how Social Security will be affected and what it will mean for retired families and beneficiaries.
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