Millions of Americans have received their first Social Security checks of 2025 — and they’re bigger than last year. So why do many retirees still feel it isn’t enough?

Why many retirees still feel broke

Living on Social Security alone is challenging, yet for many, the safety net represents their primary or only source of income. As of mid-2024, the Social Security Administration reported that among beneficiaries aged 65 and older, 37% of men and 42% of women receive half or more of their income from Social Security. And among those 65 and older, 12% of men and 15% of women rely on Social Security for 90% or more of their income.

The average retiree household spends nearly $1,787 per month on housing, including mortgage payments, property taxes, insurance and maintenance, according U.S. Bureau of Labor Statistics data. That’s almost an entire average Social Security check gone before covering food or utilities.

Health care costs are another financial burden, rising faster than most other expenses. Fidelity estimated that a 65-year-old retiree leaving work in 2024 could expect to spend an average of $165,000 on medical expenses throughout their retirement. Medicare premiums, co-pays, over-the-counter medications and out-of-pocket expenses eat up an ever-growing portion of Social Security benefits.

"For most Americans, the difficulty with affordable medications isn’t over the ones that cost thousands of dollars," Tori Marsh, director of research at GoodRx, an online platform that helps seniors find affordable prescription drugs, told Fox Business.

"It’s about affording routine drugs for chronic conditions, and finding that their insurance doesn’t cover what it used to."

Then there’s the unavoidable, and rising cost of food and transportation. By the time retirees cover their essential expenses, the total can outpace their monthly benefit.

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Why COLAs lag inflation

Social Security’s COLA is meant to help retirees maintain their standard of living by keeping pace with inflation. But there have been questions about whether the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — the index used to calculate COLA — accurately reflects the spending patterns of retirees. Also, the annual adjustments can arrive well after inflation has hiked prices on everyday items.

The problem has been especially clear in recent years. In 2023, retirees saw an 8.7% COLA, one of the biggest increases in decades, but a full year after inflation had increased by nearly the same proportion.

By 2024, the adjustment dropped to 3.2%, and now, for 2025, it has fallen again to 2.5%. Meanwhile, key expenses like health care and rent have continued climbing faster. For many retirees, this means that even when they get a raise, it may not feel like a raise.

Retirees need more than Social Security

For decades, Social Security was meant to supplement retirement savings, not fully replace a retiree’s income. But today, many older Americans don’t have pensions or substantial savings to fall back on.

The U.S. Government Accountability Office reports that as of 2022, about half of households with a worker age 55 and older had no retirement savings, and 32% had no retirement savings or a defined benefit plan. As costs rise and Social Security’s purchasing power shrinks, retirees can either cut spending, go back to work or risk outliving their money.

While today’s Social Security recipients grapple with reduced buying power, the statistics around Social Security COLAs should serve as a wake-up call for younger workers. Relying solely on Social Security for retirement can be a dangerous gamble. Building up savings through 401(k)s, individual retirement accounts (IRAs) and other investments is more crucial than ever.

Otherwise, they could find themselves in the same situation as current retirees, watching their Social Security checks grow a little each year, but never enough to actually keep up.