Many retirees expected this month’s Social Security Payment to come with a little financial raise. However, even though the payments were boosted, especially because of this year’s cost-of-living adjustment (COLA), many say that it still feels flat.
So why does this month’s Social Security payment raise still feel flat? There are two key facts: One is that this year’s COLA was smaller than usual, and secondly, although inflation is cooling, its impact is delayed. Still, retirees are straining to pay for daily expenses.
The Smallest COLA in Years
2025 had the smallest COLA increase in several years. Social Security recipients received a 2.5% cost-of-living adjustment, but the boost did not raise monthly checks by much. Due to the slight increase, most seniors are still struggling to keep up with the rising cost of groceries, healthcare, and housing.
For instance, an individual who receives $1,800 a month only gets a $45 per month increase, which is not even enough to counter the rising cost of utility bills and prescription drugs. Therefore, even though this month’s Social Security payment includes the 2025 raise, it still doesn’t feel like much.
Inflation is Cooling But the Impact is Delayed
March’s Consumer Price Index (CPI) indicated a 0.2% drop in prices every month, and a 2.4% rise year-over-year. These figures show that inflation is easing. COLA is designed to help beneficiaries keep up with the rate of inflation. A decline in the rate of inflation throughout 2025 will see the 2.5% COLA outpacing the rate of inflation. Although this is a rare occurrence, the purchasing power of retirees could be boosted.
The cost of necessities that retirees need daily has increased, too, thus undermining the rise in monthly checks. The rise is still not enough and fast enough, according to many retirees.
Why Retiring on Social Security Alone is so Risky
Social Security alone is not sufficient for most retirees. It only replaces 40% of the average worker’s pre-retirement income. To avoid financial stress during retirement, it is therefore critical to have personal retirement savings. If you are still working, you can strengthen your financial future by:
- Saving your annual raises instead of spending them.
- Take on side hustles and save the earnings into a retirement account.
- Invest in windfalls like tax refunds instead of spending them.
- Claim your full employer’s match in your workplace 401 (k) plan.
Predictions for COLA 2026
If the rate of inflation continues to cool off, COLA for 2026 might be even smaller. Fortunately, the COLA for 2025 is already set, and therefore, it is a win for retirees if inflation continues to cool off. New government data shows that the rate of inflation has subsided compared to the pandemic-era highs.
Conclusion
The rise in this month’s Social Security payment is a boost, but for many retirees, it is not significant enough because of the persistently high costs of necessities retirees need daily. This highlights why it is risky to rely entirely on Social Security, especially when the rate of inflation is higher than the COLA adjustment.
To avoid straining financially during retirement, you should revisit your savings plan. If you are still working, you could strengthen your financial future by saving more money, investing, and looking for side hustles.