Less urgent but nonetheless concerning: recipients may have more spending power if COLA increases by fractional percentage points. The Social Security Trust Fund used to pay payments depletes faster with larger COLAs. Old-Age and Survivors Insurance (OASI) Trust Fund.
The current Social Security outlook is a 2035 trust fund depletion date. If Congress fails to address Social Security solvency before that cutoff, all recipients might lose 17% of their benefits.
But that's putting the scarier cart before the scarier horse. Since the 2025 COLA was announced, much has changed for Social Security, but no COLA has really matched real-time inflation as most seniors experience it.
The Social Security Administration (SSA) uses CPI-W statistics to calculate its annual COLA to adjust for inflation. This hurts retirement benefits' buying power in two ways.
First, COLA calculations do not account for inflationary events like war, disease, climatic problems, or economic policy changes. Two: COLA calculations are based on younger to middle-aged workers' spending patterns, not seniors', who spend more on housing and healthcare.
Although Social Security's buying power appears high on paper, it may not be in practice. In 2024, 2025, and 2026, Social Security's buying power has reduced. What can seniors (and their advocates) do besides replan a meager budget?
Beneficiaries can at least protect their Social Security benefits by contacting their state representatives and senators to express their concern. Phone, email, and fax machines can be used to contact reps to preserve Social Security financed and maintained.
Financial advisors might also recommend high-yield savings accounts or money market funds for seniors. Lower-income retirees most affected by decreased COLAs may not be able to do this.
Saving for retirement doesn't require cutting everything but survival expenses. Share groceries, petrol, and other expenses with friends, family, and neighbors to save money and sanity. You may find new ways to save and make friends while fighting inflation.