Governmental obligations and the drop of the dollar

The Silent Squeeze: Why Social Security’s 3% COLA Fails to Address the Dollar’s Decline and Soaring Living Costs

Introduction: A Wake-Up Call for Americans on Fixed Incomes

Imagine opening your Social Security check in January 2026, expecting relief from rising rent and grocery bills, only to find a modest 2.5% Cost-of-Living Adjustment (COLA)—about $40 extra a month for the average retiree. Now compare that to the price of gold, which has more than doubled against the U.S. dollar in just a few years, soaring past $4,000 per ounce in 2025.^[0] The dollar’s purchasing power is eroding, rent and food costs are outpacing official inflation numbers, and for the 72.5 million Americans relying on Social Security (SS), Supplemental Security Income (SSI), or Social Security Disability Insurance (SSDI), the gap between income and expenses is widening. This isn’t just a personal budget problem—it’s a systemic failure that demands awareness and action. Let’s dive into why the 2025 COLA falls short, how the dollar’s decline against gold signals deeper issues, and what we can do to protect the most vulnerable among us.

The Gold Standard of Concern: The Dollar’s Decline

Gold’s meteoric rise—up over 100% against the dollar since 2022—tells a story that official inflation metrics like the Consumer Price Index (CPI) obscure.^[1][3] In October 2024, gold traded around $2,700 per ounce; by October 2025, it hit $4,000, with forecasts predicting $4,100–$4,200 by year-end.^[0] Why? Investors, central banks, and everyday savers are hedging against a weakening dollar, driven by:

• Geopolitical Tensions: Ongoing conflicts and trade uncertainties make gold a safe haven.
• Monetary Policy: The Federal Reserve’s rate cuts (to ~4–4.5% in 2025) and a national debt surpassing $35 trillion signal potential currency devaluation.^[4]
• Inflation Fears: Even with official inflation at 2.4% (September 2025), real-world costs like rent and food are rising faster, eroding confidence in the dollar’s stability.^[7]

This isn’t about the dollar collapsing overnight—the U.S. remains the world’s reserve currency, backed by global demand and institutional trust. But gold’s doubling signals a growing distrust in the dollar’s ability to hold value, especially for those on fixed incomes. If a dollar buys half as much gold as it did three years ago, how can a 2.5% COLA keep up?

The COLA Conundrum: A Band-Aid on a Broken System

Every year, the Social Security Administration (SSA) adjusts SS, SSI, and SSDI payments using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For 2025, the COLA is 2.5%, boosting the average monthly benefits as follows:^[5][10]

• Social Security (retirement): From $1,920 to $1,968 (~$48/month increase).
• SSDI: From $1,539 to $1,577 (~$38/month increase).
• SSI (individual): From $943 to $967 (~$24/month increase); couples from $1,415 to $1,450.

Sounds helpful, right? But for the 68 million SS/SSDI recipients and 7.5 million SSI beneficiaries, this increase is a drop in the bucket when stacked against real-world costs.^[11] Here’s why the COLA system is failing:

1. CPI-W Misrepresents Reality:
   • CPI-W tracks costs for working urban households, not retirees or disabled individuals who spend disproportionately on rent, healthcare, and food. The CPI-E (an index for seniors 62+) consistently shows inflation 0.5–1% higher due to higher medical and housing costs.^[8]
   • Rent: Up 4–5% nationally in 2025, with cities like Miami or Phoenix hitting 6–8%. Median rent is ~$2,000/month, eating over half of an SSI recipient’s income.^[13]
   • Food: Grocery prices rose ~3–4%, but staples like eggs (up 10%) and meat (up 5–7%) hit harder. The USDA’s “thrifty” food plan for one person is ~$350/month, and a $38 COLA increase barely covers one extra grocery trip.^[14][15]
2. Regional Disparities: CPI-W is a national average, ignoring that a New Yorker faces 10% rent hikes while rural folks see “only” 3%. For high-cost areas, the COLA is laughably inadequate.
3. Lag and Underestimation: COLA uses last year’s inflation data, so 2025’s 2.5% reflects 2024’s Q3, not mid-2025 spikes. If rent or food jumps later, recipients wait until 2026 for relief.
4. Cumulative Erosion: Since 2020, rent and food prices have risen ~20% and 25%, respectively, while cumulative COLAs total ~10%.^[13][14] That’s a real loss in purchasing power, forcing tough choices: skip meds, cut meals, or fall behind on rent.

The Bigger Picture: Are Obligations Being Dodged?

The skyrocketing gold price raises a chilling question: Could the government use dollar devaluation to “escape” its obligations to SS, SSI, and SSDI recipients? In extreme hyperinflation scenarios (think Weimar Germany or modern Venezuela), governments have let currencies collapse, slashing the real value of fixed payments to pennies. In the U.S., this would mean paying out promised benefits in dollars worth “a dollar on a hundred,” as some fear.

We’re not there yet. The dollar’s global dominance, backed by U.S. Treasuries and the Federal Reserve, makes outright collapse unlikely. The SSA’s trust fund, while projected to deplete by 2035 without reform, still holds ~$2.7 trillion.^[9] Benefits are legally binding under the Social Security Act, and even during government shutdowns (like the one looming in late 2025), payments continue as “mandatory spending.”^[17]

But the gold surge and lagging COLA suggest a subtler erosion. By sticking with CPI-W, the government effectively underadjusts benefits, letting inflation chip away at real value without formally cutting payments. It’s not a conspiracy—it’s inertia in a system designed for fiscal caution, not fairness. Switching to CPI-E would cost ~$200 billion over a decade, a tough sell in a polarized Congress.^[8]

What’s Being Done (and What’s Not)

The government isn’t ignoring the problem, but solutions are patchwork:

• 2025 COLA: Locked in at 2.5%, with 2026 projected at 2.6% (~$54/month average boost).^[6] It’s something, but it trails rent and food inflation.
• Inflation Reduction Act: Caps insulin at $35/month and Medicare Part D out-of-pocket costs at $2,000/year (2025), freeing up cash for other essentials.^[12]
• Supplemental Aid: Programs like SNAP (~3% benefit hike in 2025) and LIHEAP ($200–$1,000/year for utilities) help, but access varies, and Section 8 housing waitlists stretch years.^[15]
• Long-Term Fixes: Proposals to save Social Security (e.g., lifting the $168,600 payroll tax cap or raising the retirement age to 69) are stalled. CPI-E adoption is pushed by groups like AARP but lacks bipartisan traction.^[9]

If gold hits $5,000+ or inflation spikes (e.g., from energy shocks), pressure could mount for emergency measures—like tying COLA to a real-cost index or issuing inflation-linked bonds. But don’t hold your breath; political gridlock and election cycles (2026 midterms) slow change.

A Call to Action: What You Can Do

This isn’t just about numbers—it’s about dignity for millions struggling to afford basics. Here’s how to fight back:

1. Check Your Benefits: Log into your my Social Security account to confirm your 2025 COLA (letters mailed by December 2024). Call 1-800-772-1213 if you spot issues.
2. Tap Resources:
   • SNAP: Apply via fns.usda.gov/snap for $200–$300/month in grocery help.
   • LIHEAP: Visit energy.gov for utility bill aid.
   • Housing: Contact your local Public Housing Agency (hud.gov) for Section 8 or low-income options, despite long waitlists.
3. Advocate: Join groups like the Senior Citizens League to push for CPI-E or fairer COLA formulas. Call your congressional rep—your story matters.
4. Community Solutions: Explore shared housing, bulk-buying groceries with neighbors, or local food pantries to stretch dollars.

Conclusion: Demand a Fairer Future

The 2.5% COLA for 2025 is a slap in the face when gold’s doubled, rent’s up 5–8%, and eggs cost 10% more. It’s not just math—it’s a signal that the system is failing those who need it most. The dollar’s decline against gold isn’t a distant economic blip; it’s a warning that purchasing power is slipping, and fixed-income Americans are bearing the brunt. We can’t wait for 2035’s trust fund crisis or a hypothetical hyperinflation to act. Share this post, talk to your neighbors, and demand a COLA that reflects real costs—because a dollar that buys half the gold it used to shouldn’t mean half a life for our retirees and disabled. Let’s make noise until Washington listens.

Sources

• [0] Gold price forecasts, October 2025.
• [1] Gold price trends, 2024–2025.
• [3] Gold price trends, 2024–2025.
• [4] Federal debt and monetary policy, 2025.
• [5] SSA 2025 COLA announcement.
• [6] 2026 COLA projections.
• [7] CPI-W inflation data, September 2025.
• [8] CPI-E vs. CPI-W comparisons.
• [9] SSA trust fund projections.
• [10] SSA 2025 COLA announcement.
• [11] SSA beneficiary statistics.
• [12] Inflation Reduction Act, Medicare provisions.
• [13] Rent inflation data, 2025.
• [14] Food price and SNAP data, 2025.
• [15] Food price and SNAP data, 2025.
• [17] SSA operations during shutdowns.

Note: Want to localize this for your city’s rent/food costs or add a personal story to amplify the message? Contact us to tailor this further!