"Social Security's January adjustment delivered an unusual advantage this year. The 2.8% increase slightly outpaced actual inflation, marking a reversal from recent years when adjustments lagged behind rising costs. This narrow cushion offers breathing room, though categories like groceries and utilities-where retirees spend most heavily-continue rising faster than the headline number suggests. The adjustment's advantage stems from an unusual timing quirk."
"The challenge lies in how inflation hits different spending categories. Food prices, dining costs, and utility bills rose faster than the overall rate, according to recent Bureau of Labor Statistics data. Retirees spend disproportionately on these necessities, which means the headline inflation number understates the real impact on monthly budgets. Even with the COLA cushion, many will feel squeezed in categories that matter most."
Social Security beneficiaries received a 2.8% cost-of-living adjustment that slightly outpaced actual inflation, producing a modest boost in purchasing power. The increase was locked in based on mid-2025 inflation readings, and a late-year slowdown in prices amplified the January raise's real value. The benefit accumulates over twelve months but will not dramatically change monthly budgets. Essentials such as groceries, dining, and utilities have risen faster than the headline inflation rate, creating disproportionate pressure on retirees who spend more on necessities. Supplemental income sources require diversification because different assets trade off current yield against growth potential.
Read at 24/7 Wall St.
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