The Promising Social Security News That Could Benefit Retirees In 2025

There's no question that the American public has been struggling under the weight of inflation in recent years. However, arguably no group has been feeling this burden more than retirees –- specifically those relying on Social Security checks as their main or only source of income. While the average Social Security benefit can vary depending on a number of factors, the Social Security Administration places the average monthly benefit for a retired worker at $1,976 a month, as of January 2025. However, according to data from the Bureau of Labor Statistics, the average American household spent roughly $6,440 per month in 2023. Needless to say the math doesn't add up for retirees trying to get by.

This being the case, many retirees rely on COLA, or cost-of-living adjustments, to their Social Security rates in order to make ends meet. As of 2025, the Social Security COLA benefit is 2.5%. While this is intended to keep up with inflation, a lot happened to Social Security between the time the 2025 COLA rate was announced and when retirees actually started receiving the new rate. Understandably, many retirees have felt like that the 2.5% rate simply was not enough to keep up with price increases. Fortunately, core inflation hit a 4 year low in March, reaching 2.4%, according to the Bureau of Labor Statistics Consumer Price Index. Not only was this 0.4% below inflation's February 2.8% level, but it was also 0.2% percentage points lower than predicted levels. This means that the retiree Social Security COLA rate is officially beating inflation.

While slowing inflation is certainly great news for Americans in general, it's even better news for retirees. As of March 2025, inflation hit its lowest level since September 2024. Inflation also hit it's most recent peak of 3% in January 2025, before falling to 2.8% in February, and finally to 2.4% in March. While this general easing was mainly driven by a decrease in gas, transportation, and slowing services prices, not every metric of inflation showed signs of cooling down. 

For example, food prices are have been on the rise, while the cost of energy and natural gas similarly continue to rise. This being the case, while retirees can expect some relief in certain areas, other financial areas may continue to be a burden. Also, many analysts believe that inflation data is ultimately a lagging economic indicator, and that inflation will only continue to increase in 2025.

Easing inflation has some retirees worried about a potential decrease in their 2026 COLA rate. However, it's still too soon for this concern thanks to the unknown impact of one of 2025's biggest topics, tariffs. While inflation has shown signs of slowing down as of March, many analysts believe this data has not yet been affected by the economic impact of the Trump administration's tariff policy. In early April, Federal Reserve chair, Jerome Powell, stated during a conference of the Society for Advancing Business Editing and Writing that the impact these tariffs would have on the economy, and inflation, would be "significantly larger than expected," as reported by AP News.

That said, retirees should take advantage of cooling inflation while they still can. For example, with gas prices currently showing signs of easing, now would be a great time to fill up your vehicle and take care of any major errands. Also, in light of increased food prices, it could be time to switch to a cheap grocery store that can save retirees money.