Social Security COLA comes out in less than 2 months. Expect bad news

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The numbers aren't looking so favorable as of now -- and they could get even worse.

Living solely on Social Security is often not ideal, and many seniors find themselves in this situation. For those relying heavily on these benefits, annual Social Security cost-of-living adjustments (COLAs) become crucial.

These adjustments help beneficiaries maintain their purchasing power as inflation increases the cost of living.

Social Security COLAs are determined based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), specifically looking at data from July, August, and September each year.

The September CPI-W data, available around October 10, will finalize the official COLA announcement. However, whether retirees will be pleased with the adjustment is another matter.

A Look at Recent and Future COLAs

Recent years have seen relatively generous COLAs. For instance, benefits increased by 3.2% in 2024, and a significant 8.7% in 2023, following a period of high inflation. Unfortunately, next year's COLA is projected to be much lower.

Initial estimates suggest a 2.63% adjustment for 2025, though this could be adjusted based on inflation trends.

Even if the COLA ends up slightly higher, it’s unlikely to fully keep pace with inflation.

A recent survey by Motley Fool highlighted that 62% of retirees felt the 3.2% COLA for 2024 was inadequate, and 44% considered returning to work due to insufficient Social Security benefits.

Strategies to Reduce Reliance on Social Security COLAs

For those already retired, there’s not much to do but hope for a favorable COLA. However, if you’re still working, there are steps you can take to reduce your future reliance on Social Security adjustments:

1. Boost Your Savings: The more you save for retirement now, the less you’ll depend on Social Security. Even if you're 50 and starting from scratch, setting aside $500 a month with an average annual return of 8% could grow into approximately $275,000 by retirement.

This amount surpasses the median retirement savings of $200,000 for Americans aged 65 to 74, according to the Federal Reserve.

2. Delay Your Benefits: If you can wait until age 70 to start collecting Social Security, you'll significantly increase your monthly payments.

This higher base amount will help cushion the impact of any future COLA adjustments that might fall short of your needs.

Planning and saving more can help you be less dependent on Social Security adjustments, ensuring a more comfortable retirement regardless of the annual COLA changes.