In 2024, security benefits—a vital source of income for millions of Americans—will see a small 3.2% Cost-of-Living Adjustment (COLA) in an effort to keep up with inflation. Still, questions remain over this increase’s sufficiency, particularly in light of rising Medicare costs and severe financial hardships faced by retirees.
A lower COLA is predicted for 2025, which raises more concerns about retirees’ purchasing power. For the past several decades, Social Security benefits have provided over 71 million Americans—retirees, veterans, and their dependents—with essential financial support.
Social Security payouts against rising costs
Created in 1973, the Cost-of-Living Adjustment (COLA) has been applied annually since 1975 to help these payments keep pace with inflation. This change has, in large part, maintained the purchasing power of Social Security payouts against rising costs.
The increase in COLA set for 2024 was 3.2%, which resulted in a little increase in claimants’ monthly benefits. This modification was made to help beneficiaries deal with the rising expense of living, particularly in view of the current inflationary concerns.
However, there have been questions about whether this increase will be enough to maintain purchasing power, especially for those on fixed incomes.
Initial estimates for 2025 showed that the COLA will increase by 2.57%. If confirmed, Social Security recipients would get an extra $50 a month on average. While this change would provide some comfort, experts are concerned that it might not be enough to meet seniors’ financial needs.
An further financial burden on retirees could come from the projected rise in Medicare Part B rates. These rates have been steadily increasing—often more quickly than COLA changes—to cover medical expenses and outpatient care. So, when Medicare premiums are deducted from Social Security income, the net benefit increase for many seniors may be slightly lower.
The overall amount of taxes paid, the number of years of employment, and the retirement age all influence Social Security benefits. The average monthly payments for the various beneficiary categories as of 2024 were as follows:
1. About $1,907 was given to retired workers each month. Couples in retirement who filed jointly took home about $3,303 a month.
2. The average monthly survivor benefit was $1,509.50. On average, retired workers’ spouses made $910 a month.
3. An average of $892.39 was given to retired workers’ children each month.
4. Individuals who received Supplemental Security Income (SSI) were paid an average of $943 per month.
5. Couples that received SSI benefits were typically paid $1,415 a month.
