This article explores why TSCL advocates for a 3% Social Security COLA. You may skip our detailed analysis and check out 2025 Social Security COLA Increase: 5 Best Cities for Retirees.

• *Social Security Cost of Living Adjustment is going to be announced less than a month from now. Currently, the COLA for 2025 is estimated to be around 2.5%.
• *Even though inflation seems to be easing, prices of everyday essentials remain high.
• *Learn why a smaller COLA doesn’t fully capture the financial challenges faced by retirees and why 3% seems to be the bare minimum.
• *For retirees looking to enhance their financial security amid the lower COLA, our latest report highlights an AI stock trading at less than 5 times its earnings, which may offer higher returns and faster growth compared to other stocks.

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Persistent Financial Pressure

According to the Bureau of Labor Statistics, consumer price growth witnessed its lowest measure since 2021, at 2.5%. However, prices are still 21.2% higher since the pandemic-induced recession began in February 2020, per a Bankrate analysis of BLS data.  Although the rate of price increases may be moderating, retirees and other consumers are still grappling with the lingering effects of the rapid inflation they’ve experienced in recent years. After all, moderating inflation implies that prices aren’t going up as fast as they were previously, not that they are coming down.

Since the Social Security COLA is based on inflation data from the CPI, it is important to note that the CPI does not provide official estimates for inflation rates specific to subgroups, such as Americans aged 62 and older. This is why it may not fully capture the level of inflation they experience. Retirees, for instance, typically spend a larger portion of their income on healthcare and housing, areas where costs have been rising more sharply than the general inflation rate. Consequently, the COLA derived from the CPI isn’t reflective of the true cost-of-living increases faced by older Americans.

While it is true that the COLA is providing seniors with a general adjustment, it falls short of addressing the actual financial pressures faced by retirees. This discrepancy can lead to insufficient support for retirees struggling with rising healthcare costs and other essential expenses not adequately covered by the standard COLA.

TSCL’s Advocates for a 3% COLA

The Senior Citizen’s League, or TSCL, is a prominent nonpartisan seniors group that advocates for the interests of older Americans. In its recent report, it highlighted how the TSCL Social Security cost of living adjustment (COLA) model has predicted that COLA for 2025 is going to be 2.5%, raising the average retirement benefit for retired workers by $48 only. According to the advocacy group, this may not be enough.

Older Americans have been using more and more of their income over the years due to the high cost of living. The TSCL 2024 retirement survey notes that 65% of seniors have monthly expenses exceeding $2,000, up from 55% the prior year.

When asked about the effectiveness of the COLA in protecting retirees, many people do believe that it provides adequate coverage.

“Social Security benefits can lag behind inflation during short-term periods of price volatility, depending on whether the CPI is trending up or down, but “over the cycle, it really does protect people”.

– Alicia Munnell, director of the Center for Retirement Research at Boston College

On the contrary, the TSCL survey highlights that more and more seniors are spending at least $4,000 to $6,000 a month to get by. These expenses aren’t going to any “fun activities” either. 80% of senior households have had their monthly budgets increased over the past year, and 63% of respondents are now worried that their income won’t be sufficient to cover basic costs in the coming months.

This is why TSCL is advocating for a minimum COLA of 3%. It isn’t because they want seniors to have more money to spend on bucket vacations. Rather, they want it so that older Americans can live their golden period without stressing themselves about how they are going to get by. People at this age shouldn’t have to worry so much about making ends meet.

“Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%. TSCL research shows that approximately two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely”.

– Shannon Benton, TSCL’s Executive Director.

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In Conclusion

With the 2025 Social Security COLA projected at 2.5%, it’s clear that retirees face ongoing financial challenges due to high living costs and CPI limitations. A 3% COLA might better address these needs. For those seeking to boost their financial stability, investing in promising AI stocks could offer significant returns. Our report highlights an undervalued AI stock trading at under 5 times its earnings—an opportunity worth exploring for enhancing retirement portfolios.

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Disclosure: None. Here’s Why TSCL Advocates for a 3% Social Security Cost of Living Adjustment was originally published on Insider Monkey.