Millions of Americans are receiving bigger Social Security checks for 2025 — the upshot of an 'affordability adjustment.' So why do many retirees still feel it isn’t enough?

The answer is simple: For many, that extra $50 barely dents their daily bills. Housing, health care and food costs are all outpacing COLA, leaving many retirees with the same sinking feeling that Social Security isn’t keeping up, and that their purchasing power is shrinking.

“There isn’t a single county in the country where the average Social Security benefit covers an adequate lifestyle,” Jan Mutchler, professor of gerontology at the University of Massachusetts in Boston, told CNBC in January.

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 the end of 2024, the Social Security Administration reports that among beneficiaries aged 65 and older, 39% of men and 44% 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, explained to 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.

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.