WASHINGTON (AP) — Some seniors say the Social Security Administration’s cost-of-living adjustment won’t help much in their ability to pay for their daily expenses.
The agency announced Friday the annual cost-of-living adjustment will go up by 2.8% in 2026, translating to an average increase of more than $56 for retirees every month.
Eighty-year-old Florence, South Carolina, resident Linda Deas says it does not match the current “affordability crisis.”
The benefits increase will go into effect for Social Security recipients beginning in January.
Friday’s announcement was meant to be made last week but was delayed because of the federal government shutdown.
Recipients got a 2.5% COLA boost in 2025 and a 3.2% increase in 2024.
Millions of seniors today collect monthly benefits from Social Security. And many people rely on those benefits to cover the majority — or all — of their retirement expenses.
In recent years, living on Social Security alone has been particularly tough due to rampant inflation. But thankfully, inflation is starting to cool to the point where the Federal Reserve is finally talking about interest-rate cuts, and prices are starting to moderate.
Image source: Getty Images.
But while a slower pace of inflation is a good thing for seniors on Social Security, it could also have a less desirable consequence — a stingy cost-of-living adjustment (COLA) for 2025.
If you’re curious to know what next year’s Social Security raise will amount to, you should mark your calendar for Oct. 10. That’s when the Social Security Administration (SSA) is expected to make an official 2025 COLA announcement. But it’s also important to prepare for the fact that next year’s Social Security COLA is likely to come in lower than 2024’s unless inflation takes an unexpected turn in September.
What we know about the 2025 Social Security COLA so far
Social Security COLAs are based on third-quarter inflation data, which explains why we don’t have an official number just yet. We need to wait for September’s Consumer Price Index reading to become available, and that won’t happen until Oct. 10.
However, based on recent inflation data, there are estimates of what next year’s Social Security COLA could look like. The nonpartisan group The Senior Citizens League (TSCL) is projecting a 2025 COLA of 2.57%. That’s considerably lower than the 3.2% raise seniors on Social Security received this past January.
But again, inflation was also higher in late 2023 than it’s been in recent months. So while a smaller 2025 COLA may be disappointing, it also makes sense.
Of course, there’s room for that 2.57% projection to wiggle, based on incoming inflation data. But based on how things have been trending, that number is more likely to shift downward than upward.
Take action once an official announcement hits
You can check the SSA’s website on Oct. 10 for news of your 2025 COLA. At that time the SSA should also release other updated numbers, like the earnings-test limit for 2025, the maximum monthly benefit, and the wage cap for Social Security tax purposes.
If 2025’s COLA worries you, then you’ll want to take action before the start of the new year. Specifically, if you think you’ll struggle to pay your bills in 2025, you should assess your spending and see if there’s any room to cut corners. You may also want to consider relocating somewhere less expensive to stretch your benefits further.
If you have a larger home that’s costly to maintain, downsizing could be another big money-saver. And if you’re already living as frugally as you can bear to and you don’t want to move (or don’t think it’s feasible), see if it’s possible to pick up some occasional gig work. If you’re able to earn an extra $100 to $200 a month, that could easily make up for a smaller Social Security COLA.
At this point, you don’t have to wait much longer to see what your 2025 Social Security raise will come to. But you may want to brace for a lower number than you’ve seen in recent years.
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(NewsNation) — Unreliable websites claiming Social Security recipients will receive a $600 payment increase or get a new stimulus check this month are spreading misinformation, according to the agency.
“Reports of a $600 payment increase are FALSE, please be aware and don’t fall for this stunt,” Social Security Commissioner Martin O’Malley said in a news release.
The agency didn’t specify how the rumor started, but NewsNation reviewed multiple fake news articles making the claim. One described the bogus payment as the “long-awaited $600 increase.”
The false rumor gained so much traction that the Social Security Administration’s phone lines were slammed with more than 463,000 calls in a single day, O’Malley said.
NewsNation identified other online articles falsely claiming Social Security recipients are set to receive new stimulus checks. That’s also untrue, a spokesperson for the Social Security Administration confirmed via email.
Social Security-related scams are the number one government imposter scam in the United States and last year consumers reported losing more than $126.5 million to them, according to the Federal Trade Commission (FTC).
Official announcements about changes to payments can be found on the government website. Individuals are also notified directly.
When will the 2025 COLA increase be announced?
The annual cost-of-living-adjustment (COLA) for 2025 will be announced in October. Any changes will then appear in your check starting in January 2025.
The latest estimate from The Senior Citizens League projects Social Security’s COLA will be 2.57% in 2025 but that isn’t set in stone. The final amount is calculated based on the average inflation rate from July to September, which is then compared to the same period the year before.
“The annual cost-of-living increases issued by SSA are ALWAYS automatic. No additional information is required for you to receive the legitimate COLA increase,” Gail Ennis, the Social Security Administration’s Inspector General, said in a statement.
When will I get my Social Security check in June?
Some Social Security recipients saw a slight change in June. Typically, Supplemental Security Income (SSI) payments go out on the first of each month but because June 1 fell on a Saturday, those payments were sent on Friday, May 31. That doesn’t mean SSI recipients got an extra payment, instead, they just received it a day early.
For others, here’s when you can expect your Social Security check, according to the agency’s schedule:
June 3: Payments for those who have received Social Security since before May 1997.
June 12: Payments for people whose birthday falls between the first and 10th of any given month.
June 18: Payments for people whose birthday falls between the 11th and 20th of any given month.
This is a day earlier than usual because Juneteenth is a federal holiday
June 26: Payments for people whose birthday falls between the 21st and 31st of any given month.
Brisk inflation on the tail end of the pandemic led to a historic 8.7% cost-of-living adjustment (COLA) for Social Security benefits in 2023. Retired workers hadn’t received a pay raise that large in four decades. Yet, the 2023 Retirement Confidence Survey (RCS) conducted by the non-profit Employee Benefit Research Institute (EBRI) found that many retirees continued to struggle with financial hardship last year.
“The confidence both workers and retirees have in their ability to finance their retirements dropped significantly in 2023,” said Craig Copeland, EBRI Director of Wealth Benefits. “The last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis.” The RCS also found that 58% of retirees expected to make significant spending cuts to keep pace with rising prices.
Adding to those concerns, Social Security benefits got a smaller 3.2% COLA this year, much to the dismay of many recipients. Indeed, 71% of retirees surveyed by The Senior Citizens League (TSCL), a non-profit senior advocacy group, said household costs have increased more than 3.2%, and 53% have already spent their emergency savings.
To that end, many retirees are probably hoping (and perhaps even expecting) a larger benefit increase next year. Unfortunately, the latest projection from TSCL shows Social Security’s COLA shrinking once again in 2025.
Image source: Getty Images.
Why Social Security’s COLAs may have fallen behind inflation
Social Security’s cost-of-living adjustments (COLAs) are based on the average inflation rate during the third quarter, the three-month period that includes July, August, and September. Curiously, COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a subset of the better known CPI-U.
I call that curious because the CPI-W tracks price changes from the perspective of office workers and other employees that earn an hourly wage. But those individuals tend to spend money differently than Social Security recipients. For instance, workers may spend more on apparel and education, while retired workers tend to spend more on housing and healthcare. Some experts believe that discrepancy is why COLAs may have fallen behind inflation.
The calculation itself is straightforward: The third-quarter CPI-W from the current year is divided by the third-quarter CPI-W from the prior year, and the percent increase (if any) becomes the COLA in the following year. For instance, the CPI-W increased 3.2% in the third quarter of 2023, so Social Security benefits increased by 3.2% in 2024.
Social Security benefits are on pace for a 2.6% COLA in 2025
Inflation has definitely moderated since peaking in June 2022, but an unsettling trend has emerged in recent months. Rather than continuing to decelerate, consumer prices are once again building steam. Specifically, the CPI-W increased 2.9% in January, 3.1% in February, and 3.5% in March, the highest reading in seven months.
The March reading of 3.5% is particularly troubling because it tops the 3.2% COLA applied to Social Security benefits this year. That means benefits lost buying power last month because they increased less quickly than consumer prices. If that trend persists, beneficiaries may find themselves in an increasingly difficult financial position as the year drags on.
Despite that challenge, Social Security payments are on track to get a 2.6% COLA next year, according to The Senior Citizens League. That updated forecast tops the 1.8% COLA the group projected in February, but it falls short of the 3.2% COLA doled out in 2024. That is certainly an unpleasant surprise for many retired workers.
For context, the average retired-worker benefit was $1,910.79 per month in February 2024. Adding 2.6% to that figure brings the total to $1,960.47, meaning the average retiree would get about $49.68 more per month if Social Security benefits do indeed get a 2.6% COLA in 2025.
Of course, that figure is just an estimate. The Social Security Administration cannot determine the official COLA until third-quarter inflation data is available. That information is usually published in mid-October. In the meantime, retired workers should hope for the best but plan for worst. Meticulous budgeting and frugal spending are good places to start.
Additionally, it wouldn’t hurt to bring in some extra income. That could mean getting a part-time job, or simply moving money to a high-yield savings account, many of which look attractive given that interest rates have risen substantially.
The $22,924 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
The buying power of Social Security has dropped 36% since 2000, meaning that oldest adults who retired before 2000 would need more than $500 a month extra just to maintain the same level of buying power, according to a new study by the Senior Citizens League, a pro-senior think tank.
The Senior Citizens League also said it expects the 2024 cost-of-living adjustment for Social Security to be 3.1%, compared with the 8.7% increase in 2023’s COLA. The organization said last month it expected COLA for 2024 to be less than 3%.
