Inflation presents a challenge for most American households, but it can be particularly pernicious for retirees who live on a fixed income. For that reason, retirees who have signed up for Social Security benefits closely monitor the annual cost-of- living adjustment in their payments. Forty percent of seniors rely on Social Security for more than half of their monthly income, and 14% rely on it for more than 90% of their income, according to an analysis by AARP.
Those seniors may be disappointed by the increase in their benefits in 2025. If the inflation rate remains on track, the annual adjustment will be less than 3%, the smallest increase since 2021. The Kiplinger Letter forecasts that the 2025 COLA will be 2.6%, down from 3.2% in 2024.
