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Social Security's 2.5% COLA Draws Criticism from Seniors

Social Security's 2.5% cost-of-living adjustment (COLA) for 2025 fails to keep pace with rising expenses. Many seniors advocate for a shift to CPI-E for a more accurate reflection of their costs. Congress faces challenges in reforming the system without incurring additional costs.

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Social Security's Cost-of-Living Adjustment Concerns

The recent report discusses Social Security's 2.5% COLA for 2025, which many seniors believe is insufficient given rising expenses, especially in healthcare. The current calculation method using the CPI-W does not reflect the actual cost increases faced by retirees. A proposed switch to the CPI-E index could result in higher benefits for seniors but raises long-term funding concerns for the Social Security program.

The most pressing issue highlighted is the projected depletion of Social Security's trust funds by 2035, exacerbated by current expenditures exceeding revenue since 2021. Congress may have time to act to fund the program adequately, but political reluctance to introduce unpopular tax increases may hinder efforts to reform.

Even without detailed financial metrics like revenues or margins, the implications of a funding gap pose considerable risks for future benefit payouts, which could affect stock prices of companies dependent on consumer spending patterns, particularly those focused on the senior demographic.

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