The Social Security Cost-of-Living Adjustment (COLA) Forecast for 2025 Was Just Updated, and It May Surprise Retirees

Brisk inflation on the tail end of the pandemic led to a historic 8.7% cost-of-living adjustment (COLA) for Social Security benefits in 2023. Retired workers hadn't received a pay raise that large in four decades. Yet, the 2023 Retirement Confidence Survey (RCS) conducted by the non-profit Employee Benefit Research Institute (EBRI) found that many retirees continued to struggle with financial hardship last year.

"The confidence both workers and retirees have in their ability to finance their retirements dropped significantly in 2023," said Craig Copeland, EBRI Director of Wealth Benefits. "The last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis." The RCS also found that 58% of retirees expected to make significant spending cuts to keep pace with rising prices.

Adding to those concerns, Social Security benefits got a smaller 3.2% COLA this year, much to the dismay of many recipients. Indeed, 71% of retirees surveyed by The Senior Citizens League (TSCL), a non-profit Senior advocacy group, said household costs have increased more than 3.2%, and 53% have already spent their emergency savings.

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Source Fool.com