At this point, we’re only a few days away from a 2025 Social Security cost-of-living adjustment (COLA) announcement. And if you’re someone who gets the bulk of your senior income from Social Security, you may be eager to know how much your monthly benefits will increase in the new year.

But being reliant on Social Security COLAs is not a great way to function in retirement. In fact, you should know that while those COLAs are designed to help seniors maintain their buying power as inflation drives the cost of living upward, they often fail miserably.

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Last year, the nonpartisan Senior Citizens League revealed that Social Security beneficiaries had lost 36% of their buying power since 2000. And a big reason boils down to how those COLAs are calculated.

Social Security COLAs are based in changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the CPI-W doesn’t do a great job of capturing the costs that are specific to older people. And all you need to do is read the name of that index carefully to see why.

Social Security recipients, by nature, aren’t wage earners. Granted, it’s possible to work and collect Social Security at the same time. But for the most part, those receiving benefits are retired from their jobs.

And Social Security recipients aren’t necessarily living in urban areas, either. So until a new method of calculating COLAs is introduced, Social Security recipients are likely to keep losing buying power.

That’s why it’s important to have a strategy for retirement that’s less COLA-dependent. Here are some ways to achieve that.

1. Have outside savings

Social Security will only replace about 40% of your pre-retirement wages if you earn a typical income. So even if the system for determining COLAs improves, it’s a good idea to have outside savings to tap.

Contributing steadily to an IRA or 401(k) plan throughout your career could get you to a nice place savings-wise if you invest your money in stocks, which have a history of producing strong returns. A $400 monthly contribution over 30 years, for example, could result in a portfolio worth about $544,000 if we apply an annual 8% return during that time, which is a notch below the stock market’s average.

2. Invest in assets that provide ongoing income

It’s important to set yourself up with steady income in retirement on top of Social Security. To that end, aim to hold investments that don’t just potentially gain value, but also pay out on a regular basis.

Municipal bonds are a good fit in this regard. They’re considered a fairly stable investment, and the interest they pay isn’t subject to federal taxes. You may also want to consider holding REITs, or real estate investment trusts, in your portfolio as a senior, since they’re required to pay out at least 90% of their taxable income to shareholders as dividends.

3. Be mindful of your spending

Some people spend similarly in retirement to how they spent during their careers. But that only works if you have a comparable amount of income.

If you’re looking at a lower income in retirement, that’s understandable. But it also means you may need to adjust your spending to avoid financial stress.

Think about whether you need to keep the home you raised your family in, or whether it pays to downsize for the savings involved. Similarly, think about where you’re living.

A larger, more expensive city may have made sense while you were working due to the access it gave you to jobs. If you’re no longer working, relocating to a less expensive part of the country could help you better stretch your retirement income on a whole.

Social Security’s COLAs are supposed to do seniors a world of good. The unfortunate reality, though, is that they often fall short of that goal. Setting yourself up to be less reliant on those COLAs could spell the difference between financial peace of mind in retirement versus years of money-related worries.

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