Tariffs often lead to higher consumer prices, resulting in increased inflation. For retirees on fixed incomes, this means their dollars won't stretch as far, diminishing their purchasing power.
Social Security COLAs are designed to offset inflation. However, the 2025 COLA is set at 2.5%, down from 3.2% in 2024.
COLAs are currently calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Advocates suggest using the Consumer Price Index for the Elderly (CPI-E) to calculate COLAs, as it better represents retirees' expenses.
Tariffs can increase the cost of imported medical supplies and pharmaceuticals. For retirees, who typically have higher healthcare needs, this could lead to significant financial strain.
If Social Security benefits don't keep pace with inflation, retirees might need to withdraw more from their savings, potentially pushing them into higher tax brackets.
Trade tensions from tariffs can lead to economic instability and market fluctuations. Retirees relying on investment income may see reduced returns, impacting their overall financial security.
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