Social Security recipients will receive a 2.5% cost-of-living adjustment increase in their payments starting in 2025. This is the smallest increase since 2021 and equates to an average increase of $48 per month. Advocates argue that the current COLA determination process does not accurately reflect seniors’ spending patterns, leading to a declining standard of living. The Consumer Price Index for Urban Wage Earners and Clerical Workers is used to calculate COLA, but an unofficial index tracking goods and services more likely to be purchased by older adults, known as CPI-E, has been rising faster.
The increase in Medicare Part B costs, which are automatically deducted from Social Security checks, will offset some of the COLA increase, resulting in a projected drop of about $10 in monthly payments for 2025. Health care costs have been changing due to the Inflation Reduction Act of 2022, which introduced new caps on out-of-pocket spending but has led to the phasing out of existing prescription drug plans.
There have been efforts to switch to the CPI-E to better reflect seniors’ spending habits, but the current political environment in Washington has made it difficult to address issues related to Social Security and Medicare. Advocates believe that Congress is aware of the problem but has been unable to find a solution due to gridlock. Overall, seniors and Social Security recipients are facing challenges due to rising costs and changes in the healthcare landscape.
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