Social Security’s cost-of-living adjustments (COLAs) are well-known. Every year, retirees eagerly await the arrival of the third trimester to compute the following year’s adjustment. These COLAs are intended to assist retirees in meeting their ongoing expenses; however, the COLA is applied after the expenses have grown, implying that pensioners would never be able to recoup the additional savings they have spent.
These adjustments are now automatic, even if they were not previously, and they are one of the highlights for persons on fixed incomes because they are intended to rise with inflation and help them maintain their quality of life. This is why a tiny COLA for seniors in 2025 is so depressing. Even though inflation rose beyond the COLA in the first few months of 2024, rendering the increase insufficient, by the end of the year, it had cooled significantly, resulting in a 2.5% increase in benefits for the new year 2025.
This increase means that the average monthly payout of $1,927 will climb to $1,976, a $49 increase. There is only one problem with this: many seniors will be unable to benefit from this rise since it will be used to pay for the predicted Medicare increase.
Will your Medicare Part B premiums reduce your 2025 Social Security COLA?
For those who are unaware, once you reach the age of 65, you are eligible for Medicare participation. While most enrollees receive a free portion of the program (Part A), there is a portion that must be paid for, which is deducted automatically from your Social Security monthly checks. This section, known as Part B, addresses:
- Services provided by doctors and other health care providers.
- Outpatient care.
- Home Health Care
- durable medical equipment (such as wheelchairs, walkers, hospital beds, and other equipment)
- Many preventative services (such as screenings, shots or immunizations, and annual “Wellness” checks)
The bad news for seniors enrolled in Medicare is that Part B premiums increased this year, and the standard monthly Part B premium will rise from $174.70 to $185 by 2025. The Centers for Medicare and Medicaid Services report a $10.30 rise.
As a result, seniors who have their premiums automatically deducted from their monthly benefits and get the average Social Security payments will see a $39 rise rather than the expected $49.
For those who have a lot of savings and do not rely on benefits to make ends meet, this is not a big deal; in fact, these seniors are most likely not enrolled in Part B, but have a more tailored Medicare Advantage plan that adapts to their needs; however, for those who do rely on Part B, the small COLA increase combined with the Part B increase may cause their finances to stagnate and not be enough to cover costs.
There are a few things elders may do to prevent being negatively impacted by the changes, and while many will not like the options, it is preferable to deal with the situation productively rather than struggling to make ends meet. The first step is to continue working if you have not entirely retired. This will boost your monthly benefit. If you have previously worked, try part-time work such as gig work, which is a highly flexible method to generate money or a regular part-time job with fixed hours. Aside from assisting financially, it may also help you stay active and meet new people, all of which benefit your mental health and mobility.
