The 2025 cost-of-living adjustment (COLA) for Social Security benefits will raise the average check to $1,976 per month, but some argue it’s insufficient to cover rising costs. A flaw in the government’s calculation method may be the culprit, estimated to cost the average retiree $120 next year. The issue lies with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which focuses on urban households with employed members.
In contrast, a separate index, the Consumer Price Index for the Elderly (CPI-E), better reflects spending habits of retirees 62 and older. If used, COLAs would be higher in most years, resulting in an additional $2,689 over a decade. However, there are currently no plans to change the calculation method.
Retirees will need to supplement their Social Security checks with personal savings or income from a job to cover the shortfall. The issue highlights the importance of maximizing Social Security benefits and exploring other government benefits like Supplemental Security Income (SSI).
Source: https://eu.lohud.com/story/money/personalfinance/retirement/2024/12/22/2025-cola-may-cost-retirees/77081418007