What's Happening
9 minutes ago

Want $10,000? Invest $2,500 Into XRP (Ripple) and Wait 4 Years.

foolfool.com
10 minutes ago

Lyft CEO Sees Autonomous Vehicles Including Alphabet's Waymo As Game-Changer For Ride-Hailing, Not A Threat: 'The More AVs… The Better Lyft Does'

benzingabenzinga.com
14 minutes ago

Buying This Artificial Intelligence (AI) Chip Stock Is a No-Brainer After This Development

foolfool.com
14 minutes ago

Looking for Dividend Stocks to Buy in February? Consider These 3 Dow Jones Components.

foolfool.com
29 minutes ago

1 Must-See Quote for AI Stock Investors From Arm Holdings' CEO

foolfool.com
36 minutes ago

Could Dogecoin Make You a Millionaire in 2025?

foolfool.com
37 minutes ago

This Stock Could More Than Double By 2029, According to Billionaire Bill Ackman

foolfool.com
39 minutes ago

Intel Just Pulled Ahead in This Key Market

foolfool.com
44 minutes ago

Did China's DeepSeek Just Crash and Burn President Trump's $500 Billion AI Stargate Project?

foolfool.com
45 minutes ago

US Stocks Set For A Cautious Start Ahead Of Inflation Data: Expert Says 'Strong Bull Markets Tend To Roar Back To Life After Corrections'

benzingabenzinga.com
49 minutes ago

Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term

foolfool.com
54 minutes ago

2 Stocks Down 47% and 82% to Buy Right Now

foolfool.com
56 minutes ago

What's a Fair Price to Buy Johnson & Johnson Stock?

foolfool.com
59 minutes ago

Is Berkshire Hathaway Stock a Buy Now?

foolfool.com
59 minutes ago

Is Archer Aviation Stock Worth the Hype?

foolfool.com
1 hour ago

'Racism Has No Place in Missouri': State Attorney General Sues Starbucks Over Hiring Policies

benzingabenzinga.com
1 hour ago

Geopolitics And Resource Nationalism Are Choking The Commodity Supply

benzingabenzinga.com
1 hour ago

Should You Buy Affirm While It's Below $85?

foolfool.com
1 hour ago

Should You Buy Bank of America While It's Below $50?

foolfool.com
1 hour ago

'Investors Seem To Remain Poised For A Good Year In The Markets' Even As Valuation Remains Elevated, Says Fidelity's Macro Chief

benzingabenzinga.com

2025’s Social Security COLA Has a Huge Silver Lining for Retirees

For months, there’s been speculation about Social Security’s 2025 cost-of-living adjustment (COLA). And at long last, seniors have an answer.

On Oct. 10, the Social Security Administration announced that benefits would be rising by 2.5% in the new year. That’s in line with recent projections. But it might also read like a disappointment compared to recent COLAs.

A smiling person outdoors.

Image source: Getty Images.

In 2024, Social Security benefits rose by 3.2% at the start of the year. In 2023, they rose 8.7%. So it’s easy to see why a 2.5% raise pales in comparison — at least at first glance.

But actually, a 2.5% COLA for 2025 isn’t bad news at all. And there’s a big reason for that.

Why a smaller COLA isn’t terrible

If you’re on Social Security, it’s natural to want your benefits to increase as much as possible. But one thing you should realize is that because Social Security COLAs are tied to inflation, a smaller one indicates that living costs aren’t rising as rapidly.

So yes, your benefits might only go up by 2.5% in the new year. But if the cost of things like groceries and gas increases at a slower pace than that, you could actually come out ahead.

Put another way, a larger Social Security COLA for 2025 wouldn’t necessarily do you more good than a 2.5% raise. And the reason is that a larger COLA would mean higher levels of inflation.

Understand the role Social Security COLAs should play in your retirement finances

A big reason smaller COLAs tend to throw Social Security recipients for a loop is that many people expect those annual raises to improve their financial lives. But that’s not what COLAs are meant to do.

The purpose of Social Security COLAs is simply to prevent seniors from losing buying power from one year to the next as inflation drives prices upward. But COLAs aren’t meant to change seniors’ finances in a meaningful way.

If you’re looking for a way to improve your financial picture, you’ll need to take matters into your own hands. Thankfully, you have some options in that regard.

Joining the gig economy is a great way to generate income. So is taking on a more traditional part-time job. And you’re allowed to work and collect Social Security at the same time, though you’ll need to be mindful of the program’s earnings-test limits if you haven’t yet arrived at your full retirement age.

Another option is to make strategic moves that allow you to stretch your Social Security checks further. These could include downsizing to a less expensive home or relocating to a part of the country where living costs are less expensive.

You may be inclined to look at a 2.5% Social Security COLA as a blow to your finances in the new year. But remember, a smaller raise means a smaller increase in consumer prices. So what you lose in one regard, you stand to gain in another.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

So you have $100,000 and you want to build it into $1 million by retirement. That’s great! Even if you have less — perhaps a

Okay, folks. It’s time to get serious about Social Security. I don’t like to be the person who sounds alarms and causes unnecessary panic. But

Image source: Getty Images The best credit cards have a lot of perks — cash back, travel rewards, purchase protection, and more. But what happens

Social Security benefits for spouses are a common source of confusion. MassMutual reports that 25% of surveyed adults near retirement age were unaware that spouses