What the 2025 Social Security COLA Means for Your Retirement

The Social Security cost-of-living adjustment (COLA) for 2025 is projected to be 2.6%, a modest increase that reflects current inflation trends. While this adjustment aims to help beneficiaries keep pace with rising costs, it’s important to understand how it will affect retirement income and whether it aligns with financial needs.

The estimated 2.6% COLA for 2025 is lower than the 3.2% adjustment provided in 2024, and it’s about average for the past two decades. This slight decrease reflects the current economic climate, as inflation has stabilized somewhat compared to the past few years. However, it’s crucial to remember that this projection could still change, as the final COLA is determined by the average rate of inflation during the third quarter of the year.

Given the relatively small increase, now is a good time to review your retirement budget and plans. Inflation can erode your purchasing power over time, and even a small difference in COLA can have a significant impact on your ability to maintain your current lifestyle.

Why You Should Consider Updating Your Retirement Plan

The 2025 COLA underscores the importance of regularly revisiting your retirement plan. With living costs, such as housing, food, and healthcare, continuing to rise, ensuring your retirement income keeps pace is essential. A financial advisor can help you evaluate whether your current plan is sufficient or if adjustments are needed.

For instance, you may need to reassess your investment strategy, explore additional income sources, or adjust your spending habits. Additionally, understanding how the COLA interacts with other sources of income, such as pensions or retirement accounts, can provide a clearer picture of your financial future.

Staying informed about changes in Social Security benefits is vital for retirees. As the 2025 COLA is finalized, take this opportunity to review your retirement plan and make any necessary adjustments.

If you’re unsure how this change will impact you, contact our office to schedule a consultation. We can guide you through the process and help you make informed decisions. Protecting your financial well-being in retirement is crucial, and proactive planning is the best way to ensure you’re prepared for whatever the future holds.

By Mark Roberts|2024-09-17T08:59:42-05:00September 10th, 2024|Retirement|0 Comments

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

What the 2025 Social Security COLA Means for Your Retirement

What the 2025 Social Security COLA Means for Your Retirement

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About the Author: Mark Roberts