PARTING SHOT

The program’ s purchasing power is being eroded from within.

ALL HAS ALWAYS BEEN MY FAVORITE SEASON— THE COOLER weather, the changing leaves, and, of course, the Social Security Administration’ s annual announcement of the cost-of-living adjustment( COLA) for Americans age 62 and older, whether they’ ve begun receiving benefits or not.

The Consumer Price Index for Urban Wage Earners and Clerical Workers( CPI-W) is updated monthly by the Bureau of Labor Statistics. It tracks the cost of more than 200 goods and services across eight major categories: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other household goods. Social Security benefits typically rise by a similar percentage, with COLA adjustments applied in December and reflected in January payments.

The adjustment announcement usually follows the release of the September CPI-W report in October. This year’ s report is scheduled for release on October 24 to meet the Social Security Administration’ s deadline.

When Social Security was first established, there were no automatic cost-ofliving adjustments— benefit increases were granted only through special legislation. That changed with the Social Security Amendments of 1972, which created an automatic adjustment beginning in 1975 to ensure benefits kept pace with inflation. Since then, only three years have seen no COLA, and the average annual increase has been a healthy 3.75 %.

Social Security has long been the cornerstone of retirees’ income plans. The annual adjustments are critical for helping people maintain their purchasing power in retirement.

Social Security has long been the cornerstone of retirees’ income plans. The annual adjustments are critical for helping people maintain their purchasing power in retirement. However, it’ s during retirement that people’ s healthcare costs— one of the largest and fastest-rising expenses for retirees— begin to take center stage.

That brings us to Medicare( which was created by earlier amendments to Social Security in the mid-1960s), and specifically a focus on the monthly Medicare Part B premium, which is automatically deducted from Social Security benefits.

Medicare Part B covers medically necessary outpatient services such as doctor visits, durable medical equipment, preventive care, ambulance services, home healthcare, mental health treatment and certain lab tests and X-rays. When Medicare began in 1966, the average Social Security monthly benefit was $ 84, and the Part B premium was just $ 3— about 3.6 % of a beneficiary’ s check. In January 2025, the average Social Security benefit was $ 1,976, while the Part B premium stood at $ 185, continued on page 58

60 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2025 WWW. FA-MAG. COM