Millions of Social Security beneficiaries have now received their first benefit checks for 2025, with a new 2.5% cost-of-living adjustment (COLA) adding $50 per month to retirement benefits on average. The increase, while modest, is the lowest since 2021, when inflation spiked. Many beneficiaries are likely feeling that the increase “wasn’t quite enough,” according to Jenn Jones, vice president of financial security at AARP.
The Elder Economic Security Standard Index, developed by the Gerontology Institute at the University of Massachusetts in Boston, evaluates the cost of living for older adults. According to the index, a single person would need $2,099 per month to cover basic needs, while a couple who owns a home without a mortgage would need $3,162 per month. In contrast, the average Social Security retirement benefits Americans stand to receive in 2025 is $1,976 per month for individual retirees and $3,089 per month for couples.
Prices continue to be high, and Social Security beneficiaries are likely feeling the strain. As Jan Mutchler, professor of gerontology, noted, “What we find with the Elder Index is that there isn’t a single county in the country where the average Social Security benefit covers an adequate lifestyle.”
The Social Security COLA may not be enough to keep up with rising costs. As Laura Quinby, associate director of employee benefits and labor markets at the Center for Retirement Research, noted, “We’re in another period where prices might be rising faster than the Social Security COLA.” The inflation rate rose 2.9% in 2024, and Quinby expects it to continue to tick upward.
Mary Johnson, a 73-year-old independent Social Security and Medicare analyst, said her 2025 COLA has been largely consumed by rising costs, including her homeowner’s insurance, home heating and cooling bills, and food costs. A new $2,000 annual cap on out-of-pocket Medicare Part D prescription drug costs, enacted in the Inflation Reduction Act, is a “biggest game changer” for older Americans, according to AARP’s Jones.
