Here’s How Social Security’s 2025 COLA Is Holding Up to Inflation

There’s a reason Social Security recipients have gotten to enjoy larger cost-of-living adjustments (COLAs) in recent years. Inflation has been rampant since it started creeping upward in 2021. And while living costs aren’t rising quite as rapidly these days as they were when inflation peaked in 2022, many retirees are still feeling the strain.

But while recent Social Security COLAs have largely been generous, 2025’s raise was an exception. This January, seniors on Social Security saw their benefits increase by a mere 2.5%. And when that COLA was announced late last year, many worried that it wouldn’t hold up well to inflation.

Now that we’re about four months into the year, we have a better sense of how 2025’s COLA is doing. And the answer is that while seniors may be enjoying some near-term relief, it could be short-lived.

How 2025’s Social Security COLA is faring right now

The problem with Social Security COLAs is that they’re not predictive. They’re designed to match recent inflation, not future inflation, which nobody can predict. Because of this, it’s possible for seniors on Social Security to get a COLA in January only for prices to skyrocket in the coming 12 months, leaving beneficiaries in a major financial bind.

Thankfully, that does not seem to be happening this year. In March, the Consumer Price Index, which measures changes in the cost of consumer goods and services, rose 2.4% on an annual basis. But that means that this year’s Social Security COLA is beating that increase. However, while that may be the case right now, things could change in the course of the year for one big reason.

Tariffs could cause inflation to soar

When the Trump administration announced plans to enforce its tariff policies in early April, the stock market tumbled and economists were quick to revise their recession forecasts. With tariffs largely paused at the moment, consumers may be in for a bit of a reprieve. But once those tariffs are implemented, the cost of goods could rise in short order.

That could, in turn, put seniors on Social Security in a position where their benefits can’t come close to keeping up with living costs based on a 2.5% raise. So that’s something retirees will need to be mindful of.

Of course, the silver lining is that if inflation does pick up during the second half of the year, it could set the stage for a much larger Social Security COLA in 2026. But that’s also not something beneficiaries should want.

Social Security recipients are likely to benefit more from moderate living cost increases than a larger boost to their monthly checks. So nobody should be hoping that tariffs fuel another intense bout of inflation.

Seniors shouldn’t rely too much on Social Security COLAs in general

Although Social Security COLAs are designed to help seniors keep up with inflation, they often fall short in that regard. So it’s best not to bank too heavily on those COLAs to stay afloat.

Instead, retirees should aim to have income outside of Social Security to live on. And all’s not lost for those who don’t manage to come into retirement with savings.

The gig economy offers plenty of opportunity to drum up additional income. And seniors with loads of equity in their home can use that to their advantage as well.

Workers should recognize that Social Security COLAs often don’t do the job they’re supposed to. And that should serve as motivation to save as best as they can.

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