Social Security benefits will arguably lose buying power next year because the 2.5% COLA understates inflation.

In December, SSI recipients will receive their payments a day early – Dec. 31 – because Jan. 1 is the New Year’s Day holiday. These checks will reflect two different amounts because the 2025 Cost of Living Adjustment increase will apply to the payment made on Dec. 31.

To help offset rising prices, Social Security provides an annual cost-of-living adjustment (COLA) that kicks in at the beginning of each year. The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI ...

The annual Social Security cost-of-living adjustment, or COLA, is one of the most important features of the government program. Without those annual raises, seniors would quickly find the purchasing power of their monthly annuity checks failing to meet their needs. That might feel like the case for some even with the COLA.

Medicare Part B premiums are rising again in 2025. The jump outpaces both Social Security's 2025 COLA and inflation, further squeezing seniors.

A Social Security cost of living increase offers retirees options such as managing costs, saving or enjoying small splurges.

Although Social Security's annual adjustment is mathematically fair, the procedure still arguably leaves retirees at a disadvantage. That is, by the time recipients begin receiving their bigger payments, they've been paying higher prices for everything for up to as much as a year.