The Fed’s December Rate Cut Brings Bad News and Good News On the Social Security COLA

17 hours ago 7

Christy Bieber

Sun, December 14, 2025 astatine 10:23 AM CST 5 min read

Social Security Card, benefits connection and 100 dollar bills. Social information funding, payment, status and national authorities benefits concept

The Fed chopped rates to 3.5%-3.75% successful December 2025. This signals little ostentation expectations and a projected 2027 COLA betwixt 2.3% and 2.6%.
Social Security benefits person mislaid 20% of their buying powerfulness since 2010 due to the fact that COLAs consistently underestimate retiree inflation.
Lower complaint cuts trim savings relationship returns for retirees but besides bespeak alleviation from the post-pandemic terms surge.
A caller survey identified 1 azygous wont that doubled Americans’ status savings and moved status from dream, to reality. Read much here.

On December 10, 2025, the Federal Reserve announced a quarter-percentage-point complaint cut, bringing the benchmark complaint to the 3.5%-3.75% range. This was some the last complaint chopped and the last Fed gathering of 2025, truthful the Fed ended up delivering a full of 3 complaint reductions implicit the people of this year. This means 2025 ends with the benchmark complaint three-quarters of a percent constituent little than the 4.25% to 4.50% people complaint we started the twelvemonth with.

The complaint chopped is simply a tiny one, but with large implications for the system arsenic a whole, arsenic it could interaction the outgo of borrowing, savings relationship and enslaved rates, and the banal market. The Fed's determination is besides an important economical indicator that provides penetration into however the cardinal slope committee members presumption trends successful the broader system arsenic a whole.

Social Security retirees request to wage attraction to these involvement complaint decisions due to the fact that the December complaint chopped -- and aboriginal Federal Reserve decisions connected involvement rates successful the coming twelvemonth -- could person a large interaction connected the Cost of Living Adjustments (COLAs) retirees are eligible for.

For galore Social Security retirees, Social Security benefits are their astir important income source. In fact, studies person shown that status benefits are the superior income root for galore families. However, these benefits person been losing crushed successful caller years and are present worthy astir $0.80 connected the dollar compared to what they were worthy successful 2010.

The crushed that the buying powerfulness of benefits has fallen is that Social Security Cost of Living Adjustments (COLAs) person done a mediocre occupation successful keeping gait with inflation. Cost of Living Adjustments (COLAs) are expected to marque definite that doesn't happen, but the look estimates ostentation by looking astatine a user terms index, CPI-W, that doesn't accurately measurement ostentation impacting retirees. The contented is that it's built astir the spending habits of municipality wage earners and clerical workers. Since retirees thin to walk much connected things wherever terms increases outpace wide inflation, the look underestimates however overmuch their benefits request to grow.