How Inflation Impacts Your Social Security and Medicare Benefits

Inflation has been an ongoing concern for retirees, especially those who rely on Social Security and Medicare to cover daily expenses. Rising prices can erode purchasing power and make fixed benefits feel smaller over time.

According to new findings from the Nationwide Retirement Institute® 2025 Social Security Survey, many Americans may already be feeling this squeeze. Understanding how inflation impacts your benefits can help you set yourself up for retirement more strategically.

Here's what the latest data shows — and what you can do to stay prepared.

The Nationwide Retirement Institute 2025 Social Security Survey was conducted online by The Harris Poll between June 2 and July 10, 2025, among 1,812 U.S. adults age 18 and older who currently receive or expect to receive Social Security benefits.

The sample included 301 Gen Z (ages 18–28), 504 Millennials (ages 29–44), 505 Gen Xers (ages 45–60), and 502 Boomers+ (ages 61+). Data were weighted for age, gender, race, education, region, income, and other demographics to ensure national representation.

The survey captures how different generations view Social Security, inflation, and long-term planning — giving insight into how Americans are adapting their retirement expectations in an uncertain economy.

Inflation adjustments — known as cost-of-living adjustments (COLA) — are designed to keep Social Security benefits aligned with rising prices. But, many Americans don't believe these increases will be enough. According to the survey, 68% of respondents think tariffs will push inflation higher than COLA can compensate for, and 40% believe it will affect their finances "a great deal." Those who pay to work with a financial professional are especially likely to share this concern.

At the same time, around two-thirds of current Social Security recipients (66%) and future recipients (69%) agree that inflation will likely outpace COLA increases, indicating widespread anxiety about maintaining purchasing power in retirement.

Most adults want to know exactly how inflation could affect the benefits they depend on. In the survey, 74% said they're interested in learning about the impact of inflation on their Social Security benefits, and 73% said the same about Medicare.

This interest reflects growing uncertainty about whether benefit adjustments will be sufficient to offset medical and living expenses.

Rising living costs are already changing retirees' spending habits. Among those currently receiving Social Security, 52% have had to cut back on discretionary spending such as dining out or travel. Nearly a third (31%) have trimmed essential expenses like groceries or medications, while 29% have relied more heavily on personal savings or retirement accounts.

Others have made more dramatic changes — 18% have downsized their living situation, and 15% have taken on part-time work to stay afloat. Notably, single adults are more likely than married ones to reduce spending on essentials (40% vs. 24%), showing how inflation may be hitting solo retirees hardest.

Many retirees recognize the need for expert help. The survey found that 72% of adults — including 30% who are very interested — want to learn from a financial planner about how inflation could impact their retirement.

Financial professionals can help retirees create diversified income strategies, understand benefit timing, and explore supplemental insurance or investment options that can help offset inflation risk.

While you can't control inflation, you can prepare for it. Start by reviewing your monthly budget to understand how much of your income is fixed versus flexible. Consider delaying Social Security to increase your monthly benefit and maintaining emergency savings to cover rising costs.

Similarly, comparing the cost of Medicare Advantage and supplemental plans each year may help minimize out-of-pocket expenses.

Dealing with the effects of inflation means a need for financial management. Track your spending, adjust for higher prices annually, and rebalance your investment portfolio to preserve purchasing power.

Even modest adjustments — such as moving excess cash into high-yield savings or inflation-protected securities — could make a meaningful difference over time.

Supplemental income can provide a safety net when living costs rise faster than benefits. Retirees may find part-time or freelance work that aligns with their skills or interests, such as tutoring, consulting, or seasonal jobs.

These efforts may not only help offset inflation but may also provide structure and social engagement during retirement.

Reducing discretionary spending is a smart way to adapt to higher costs. Reassess subscriptions, memberships, and other recurring expenses that might not be essential.

By tightening your budget strategically, you can free up funds for necessities like healthcare and housing.

Inflation is already shaping how retirees view their Social Security and Medicare benefits, with many feeling the gap between rising prices and fixed income. Planning ahead, learning about benefit structures, and consulting with a financial professional can help you navigate these changes with confidence.

As you refine your retirement plan, ensure that your savings, income sources, and healthcare choices are structured to protect your lifestyle if inflation remains elevated.