Cost-of-living adjustments (COLAs) for Social Security are well known. Every year, retirees look forward to the third trimester because it is when they can figure out their adjustments for the next year.
The purpose of these COLAs is to help retirees pay their ongoing costs, but they are applied after the costs have gone up, which means that pensioners will never be able to get back the extra money they spent.
These changes are now automatic, even though they were not before. One of the best things about them is that they are meant to rise with inflation and help people on fixed incomes keep up their quality of life.
This is why a small COLA for seniors in 2025 is so sad. In the first few months of 2024, inflation rose above the COLA, making the increase insufficient.
However, by the end of the year, it had slowed down a lot, leading to a 2.5% increase in benefits for the following year, 2025.
With this raise, the average monthly payment will go up from $1,927 to $1,976, which is a $49 rise. What is wrong with this? A lot of seniors will not be able to benefit from this increase because it will be used to pay for the expected Medicare increase.
Will your Medicare Part B premiums reduce your 2025 Social Security COLA?
For those who do not know, you can join Medicare once you turn 65. A part of the program is free for most people who sign up for it (Part A), but there is also a part that costs money and is taken out of your monthly Social Security checks. Part B of this section talks about:
- 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)
Part B premiums went up this year, which is bad news for seniors who are on Medicare. By 2025, the standard monthly Part B premium will go up from $174.70 to $185. The Centers for Medicare and Medicaid Services say that the cost has gone up by $10.30.
So, seniors whose premiums are automatically taken out of their monthly benefits and who get the average Social Security payment will see a $39 increase instead of the $49 increase that was expected.
For seniors who have a lot of savings and do not depend on benefits, this is not a big deal; in fact, these seniors probably are not even enrolled in Part B because they have a Medicare Advantage plan that fits their needs better.
But for seniors who do depend on Part B, the small COLA increase plus the Part B increase may make their money stay the same and not be enough to cover costs.
Elders can avoid being negatively affected by the changes by doing a few things. Many will not like the choices, but it is better to deal with the situation in a constructive way than to be struggling to make ends meet.
The first thing you should do is keep working if you have not already. Your monthly benefit will go up because of this. If you have had a job before, look for part-time work like gig work, which gives you a lot of freedom, or a regular part-time job with set hours.
Besides giving you money, it might also help you stay active and meet new people, which is good for your mental health and ability to move around.
