Seniors Face Financial Squeeze as Social Security Boost Falls Short

Clear Facts

• The Social Security cost-of-living adjustment (COLA) for 2025 is projected to be just 2.5%, resulting in an average monthly increase of $48.
• 65% of seniors reported monthly expenses of at least $2,000 in 2024, up from 55% in 2023, according to The Senior Citizens League (TSCL).
• Nearly 80% of senior households reported increased monthly budgets for essential items like food, housing, and prescription drugs over the last 12 months.

The Social Security cost-of-living adjustment (COLA) has been updated, and seniors may need to brace for a lean 2025. According to new projections, retirees will see an increase of just 2.5%, translating to an average monthly boost of only $48, as reported by The Senior Citizens League (TSCL).

“While 2.5% is lower than the 3.2% received in 2024, that wouldn’t be far from the historical norm,” TSCL notes.
“The COLA has averaged about 2.6% over the past 20 years. It went as low as 0.0% in 2010, 2011, and 2016 and as high as 8.7% in 2023.”

With the cost of living on the rise, surviving on Social Security alone is becoming increasingly difficult.

“Due to a higher cost of living, older Americans are using more and more of their income each month just to get by compared to a year ago,” TSCL states.
“In TSCL’s 2024 Retirement Survey, 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023.”

Retirees are understandably concerned about what this new projection means for their long-term financial stability.

“Less than 50% think they have enough money to live comfortably through retirement, and nearly 90% are worried about inflation reducing the value of their savings,” according to the 2024 U.S. Retirement Survey from investment manager Schroders.

The struggle to cover basic expenses is a growing issue among seniors.

“A rise in monthly expenses wouldn’t be much of an issue if seniors’ higher expenses were going to fun activities, like activities with their grandchildren, or discretionary costs, like bucket-list vacations,” TSCL explains.
“However, that’s not the case. Nearly 80% of senior households in the 2024 survey reported that their monthly budget for essential items like food, housing, and prescription drugs had increased over the last 12 months, with 63% saying they’re worried that their income won’t be enough to cover these basic costs in the coming months.”

The 2.5% rise is the lowest since 2021.

“Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%,” says Shannon Benton, TSCL’s Executive Director.
“TSCL research shows that approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely.”

Experts are advising smart financial planning to counteract the low COLA projection.

“Unfortunately, Social Security recipients have few options for recourse beyond prudent budgeting and part-time work,” says an expert.
“However, two sources of additional income worth consideration are high-yield savings accounts and certificates of deposit (CDs). Interest rates are at their highest level in decades, so retirees that stash money away today should find themselves with a little extra cash in the future.”

As expenses continue to climb, it is crucial for seniors to make informed financial decisions to ensure their well-being.

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