Everyone knows about the cost-of-living adjustments (COLAs) that Social Security makes. Everyone who is retired looks forward to the third quarter of the year because that’s when the adjustment for the next year can be calculated.
To help retirees keep up with their ongoing costs, these COLAs are given. However, there is one small catch: the COLA is given after the costs have gone up, so retirees will never get back the extra money they spent.
These changes used to not happen automatically, but now they do. For people on a fixed income, these changes are one of the best things because they are meant to keep up with inflation and help them keep their standard of living.
This is why it’s so disappointing that seniors will only get a small COLA in 2025. Inflation rose above the COLA in the first few months of 2024, which meant that the increase wasn’t enough. However, by the end of the year, it had slowed down a lot, and benefits went up by 2.5% for the new year of 2025.
The monthly benefit should go up from $1,927 to $1,976 because of this increase. That’s a $49 rise. There is only one problem with this: many seniors will not be able to enjoy this increase because it will be used to pay for the planned Medicare increase.
Will your Medicare Part B premiums eat into your 2025 Social Security COLA?
For those who don’t know, you can sign up for Medicare when you turn 65. Most people who sign up for the program get a free part called Part A, but there is also a part that costs money and is automatically taken out of your monthly Social Security payments. This is known as Part B and takes care of:
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
- Many preventive services (like screenings, shots or vaccines, and yearly “Wellness” visits)
Part B premiums have gone up this year, which is bad news for seniors who are on Medicare. In 2025, the standard monthly Part B premium will go up from $174.70 to $185. Based on the Centers for Medicare & Medicaid Services, that’s an increase of $10.30.
Seniors who get the average Social Security benefits will see an increase of $39 instead of the $49. This is because their premium will be automatically taken out of their monthly benefits.
This isn’t a big deal for seniors who have a lot of savings and don’t depend on benefits to make ends meet. In fact, these seniors probably aren’t 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 and the Part B increase may cause their money to stay the same and not be enough to cover their costs.
There are some things seniors can do to make sure the changes don’t hurt them. Many will not like the choices, but it’s better to deal with the problem in a useful way than to have a hard time making ends meet. First, if you haven’t already, keep working for a little while longer to raise your monthly benefit.
If you already have a job, you might want to look into part-time jobs like gig work, which gives you a lot of freedom in how you make money, or a regular part-time job with set hours. It may also help you stay active and meet new people, which is good for your mental health and your ability to move around.
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