According to a recent Social Security COLA survey by The Motley Fool that asked 2,000 retirees about the COLA, 81% of retirees say that the 2025 COLA will not help them keep up with their essential living expenses. And it isn't hard to see why.

Social Security beneficiaries have relied on annual cost-of-living adjustments (COLAs) to maintain their purchasing power.

Social Security will see some notable changes in 2025 that could impact millions of Americans. While the average benefit will increase, high earners may face a larger tax bill and retirees could find their cost-of-living adjustment falls short.

The cost-of-living adjustment (COLA) applied to Social Security payments in any given year is based on CPI-W inflation from the third quarter of the previous year. In that sense, COLAs are a reimbursement mechanism to compensate retirees for the buying power benefits lost in the previous year.