In 2025, Social Security beneficiaries received a 2.5% Cost of Living Adjustment (COLA), but inflation and rising Medicare premiums diminished this benefit's impact. With benefits intended to replace about 40% of pre-retirement income, many retirees depend on these funds for living expenses post-retirement. The question remains whether the COLA adequately compensates for inflation, considering retirees have lost approximately 20% of their buying power due to inadequacies in the COLA formula. Understanding these nuances is crucial for financial planning in retirement.
Retirees received a 2.5% Cost of Living Adjustment in 2025, yet continued inflation has significantly eroded their buying power, leading to concerns over long-term sustainability.
As increasing Medicare premiums consume a portion of the COLA increase, many seniors find that actual increases in their disposable income are less than expected.
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