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Yahoo
28-05-2025
- Business
- Yahoo
Social Security Set To Make History By Crossing $2,000 Barrier For First Time, But Seniors Still Losing Ground To Inflation
For the first time in the 90-year history of Social Security, the average monthly benefit for retired workers is projected to go beyond $2,000 next month. Despite the historic nature of this milestone, it is more an indication of inflation than financial security for beneficiaries. What Happened: The Social Security Administration's monthly reports show that the average retired-worker benefit was $1,999.97 in April. A statistical snapshot issued by the SSA indicates that May's average benefit will surpass the $2,000 threshold. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — this is your last chance to become an investor for $0.80 per share. Nancy Pelosi Invested $5 Million In An AI Company Last Year — Here's How You Can Invest In Multiple Pre-IPO AI Startups With Just $1,000. This landmark is primarily on account of rising wages, new retirees entering the system, and run-of-the-mill cost-of-living adjustments. Why It Matters: While a $2,000 check may seem like a triumph, it hides a more concerning trend. According to Yahoo Finance, Social Security's purchasing power has consistently declined. A report from The Senior Citizens League in 2023 revealed that benefits lost 36% of their value between 2000 and 2023. From 2010 to mid-2024, buying power fell another 20%. Much of this decline relates to how inflation is calculated. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the metric used for Social Security adjustments, does not accurately reflect how seniors spend, especially when it comes to housing and healthcare. Cost-of-living increases have not kept pace with real-world expenses. 'A Social Security dollar simply isn't what it once was,' the report states. Retirees who depend on these monthly payments to purchase essentials are struggling to stay within budget. The $2000 milestone comes just as the Department of Education has restarted involuntary collections on defaulted student loans, with defaulters at risk of receiving significantly reduced SSA checks. Despite President Donald Trump's claims about bolstering Social Security, multiple crucial changes to the program, capable of impacting millions of beneficiaries, are not up to him. Read Next: Hasbro, MGM, and Skechers trust this AI marketing firm — Invest before it's too late. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.30/share! Photo courtesy: Shutterstock Send To MSN: Send to MSN Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Social Security Set To Make History By Crossing $2,000 Barrier For First Time, But Seniors Still Losing Ground To Inflation originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
Inflation Is Cooling Off. Does This Mean a Lower Social Security COLA in 2026?
Inflation data for April came in lower than experts had projected. The latest estimate calls for a 2.3% COLA in 2026. There's a chance that cooler-than-expected inflation could lower the COLA even more. The $22,924 Social Security bonus most retirees completely overlook › If you haven't seen the latest inflation data, the general idea is that prices are rising more slowly than expected. We recently got a look at consumer price index (CPI) data for April, and the year-over-year inflation rate was 2.3%. Not only is this the lowest inflation figure since early 2021, but it was one-tenth of a percentage point lower than economists had expected. The core CPI, which excludes food and energy prices, matched annual estimates with a 2.8% increase, but the monthly rise was lower than expected. This is a little lower than the latest projection for the 2026 Social Security cost-of-living adjustment, or COLA, from the Senior Citizens League (not a government organization). Its latest estimate calls for a 2.4% COLA next year, which is slightly less than the 2.5% seniors received in 2025. But if inflation has been declining so far in 2025, couldn't the trend continue? With the Social Security COLA based solely on third-quarter inflation data, a continued decline in inflation could certainly have COLA implications. However, just because inflation was cooler than expected in April doesn't mean the trend will continue. Here's why many experts don't expect the low inflation to last, and what it could potentially mean for the 2026 COLA. As mentioned, the Social Security COLA uses third-quarter inflation data each year to determine the effect of inflation. The Social Security Administration looks at CPI data (specifically the CPI-W) from July, August, and September, and compares it with the same period from the prior year. The increase in the CPI-W is rounded to the nearest tenth of a percent, and that becomes the COLA. One important point to keep in mind is that April's consumer price index data included some of the effects of President Donald Trump's tariffs, but not much. There were a few notable effects, such as a rather large 9% jump in the prices of audio equipment. Several prominent economists believe that we haven't yet seen the majority of the effect from the tariffs in the inflation data. In a CNBC interview, Moody's chief economist Mark Zandi said he expects to see a noticeable effect from tariffs in the May inflation data that we should get midway through June. Another economist from the Peterson Institute for International Economics estimates that a 10% average tariff rate could add as much as 1% to the CPI "after about six to nine months." Wells Fargo senior economist Sarah House said: "I think tariffs are the biggest question mark over the inflation outlook." Because it's based on third-quarter inflation, it's impossible to predict the 2026 COLA with any degree of accuracy. Because of the ongoing tariff back-and-forth, as well as a generally slowing U.S. economy, the inflation rate on the back end of the year is more uncertain than it usually is. Essentially, the 2026 COLA is going to depend on just how much of an effect we actually end up seeing from tariffs. There are two key questions: What will the tariffs be when the dust settles, and how much inflationary pressure will the implemented tariffs put on inflation? If the trade war intensifies sharply and tariffs end up higher than expected, it could result in a spike in inflation and make the COLA significantly higher than the latest projection indicates. On the other hand, if tariffs end up essentially being quickly negotiated away and/or become a non-event for inflation data, it's entirely possible that inflation could continue to fall during the rest of 2025. The most likely outcome is somewhere in the middle of those two extremes -- but where in the middle is anyone's guess at this point. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. 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. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Inflation Is Cooling Off. Does This Mean a Lower Social Security COLA in 2026? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
14-05-2025
- Business
- Yahoo
2026 Social Security COLA estimated at 2.4% after latest inflation report
Social Security checks could increase by 2.4% next year based on Tuesday's consumer inflation report, according to estimates by an independent analyst. Overall consumer prices increased 2.3% from a year earlier, down from 2.4% rise the previous month and the smallest annual increase since February 2021, according to the Labor Department's consumer price index, a measure of average changes in goods and services costs. The so-called CPI-W subset of the consumer price report that's used to determine Social Security's cost-of-living increase rose 2.1%, down from March's 2.2% increase. The official 2026 COLA will not be determined until October because it depends on inflation data from the third quarter, which is collected between July and September. But analysts often track the estimates in the months leading up to the crucial July through September timeframe. A 2.4% COLA would be the smallest increase since 2020 and raise the average retiree benefit in April of $1,999.97 per month by about $48. In January, the average beneficiary received a 2.5% increase, which amounted to a $50 raise to $1,957, up from $1,907 in January 2024. While the estimated 2.4% COLA increase is higher than last month's forecast for 2.2%, it still may underestimate the final 2026 COLA, said Mary Johnson, independent Social Security and Medicare policy analyst. "Trump Administration tariffs are only beginning to have an impact raising consumer prices," she said. Though some of the highest of President Donald Trump's tariffs have been lowered or paused for now, economists still believe the ones in place will be enough to increase inflation soon. The "de-escalation with China provided some near-term relief. But the reality remains that we will still likely see inflation peaking at 3% later this year and there remains significant uncertainty around what U.S. trade policy will look like beyond the next 90 days," said Mike Reid, senior U.S. economist at Royal Bank of Canada. On Monday, China and the U.S. said they would pause their reciprocal tariffs for 90 days. Effective from Wednesday, the U.S. will temporarily reduce tariffs on China to 30%, down from 145%, and China will reduce tariffs on U.S. goods to 10%, down from 125%. COLA should rise in line with any inflation increases. The Social Security Administration bases its COLA each year on average annual increases in the consumer price index for urban wage earners and clerical workers (CPI-W) from July through September. CPI-W is a subset of the overall consumer inflation index that looks at the price inflation experienced by working adults younger than 62, Johnson said. The problem with that is younger working consumers spend their money differently than older people covered by Medicare. For example, economists estimate younger workers spend about 7% of their budget on healthcare costs, but research and surveys have indicated that older adults tend to spend on average 15% or more of their incomes on healthcare, she said. As a result, COLA often seems insufficient to keep up with rising costs, Johnson said. However, this year, Johnson noted that prescription drug prices have not been growing quite as fast as in past years. Prescription drug prices rose 2.3% through April from one year ago, as measured by the Bureau of Labor Statistics. In 2023, prescription drug prices increased by 3.3% from December 2022 to December 2023 before slowing down last year. Since 2023, the Inflation Reduction Act requires drug companies to pay Medicare rebates if drug prices rise faster than inflation. 'That provision, which was widely supported by Medicare beneficiaries, could be restraining runaway drug prices,' she said. Trump signed an executive order on Monday encouraging linking the cost of prescription drugs to what's paid in other nations where drug prices are negotiated by their government and tend to be much lower. The proposal is widely supported by older Americans, but it's unclear if Trump's order would lower costs, Johnson said. 'An executive order, however, is not the same thing as a law change giving Medicare the authority to use these prices in negotiations with drug companies,' Johnson noted. Courts also blocked a similar plan during Trump's first presidency. Instead, the executive order appears to encourage direct-to-consumer sales using the most favored nation pricing, which suggests it could apply to transactions outside of Medicare coverage, she said. The executive order also mentions waivers to allow for importing prescriptions from other countries where prices may be lower. 'If that doesn't muddy the waters enough, one has to wonder what effect tariffs would have on the final drug prices,' she said. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: 2026 Social Security COLA estimate up after April inflation report Sign in to access your portfolio
Business Mayor
14-05-2025
- Business
- Business Mayor
Social Security cost-of-living adjustment for 2026 is projected to be lowest in recent years. Why that may change
Customers shop for produce at an H-E-B grocery store on Feb. 12, 2025 in Austin, Texas. Brandon Bell | Getty Images The Social Security cost-of-living adjustment for 2026 is on pace to be the lowest annual benefit increase in five years, according to new estimates. But that may change depending on the pace of inflation in the coming months. The COLA may be 2.4% in 2026, according to new projections from both Mary Johnson, an independent Social Security and Medicare policy analyst, and The Senior Citizens League, a nonpartisan senior group. If that increase goes into effect next year, it would be lower than the 2.5% boost to benefits Social Security beneficiaries saw in 2025. It would also be the lowest cost-of-living adjustment since 2021, when a 1.3% increase went into effect. More from Personal Finance: Here's the inflation breakdown for April 2025 — in one chart Ways to save on groceries amid food price inflation How to land a new job in a 'low firing, low hiring' market The Social Security COLA provides an annual inflation adjustment to all of the program's beneficiaries, including retirees, disabled individuals and family members. The annual adjustment for the next year is calculated by comparing third-quarter inflation data for the current year to the previous year. The year-over-year difference determines the annual increase. However, if there is no rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, from year to year, the COLA may be zero. The CPI-W, used to calculate Social Security's COLA, increased by 2.1% over the past 12 months, according to data released Tuesday by the Bureau of Labor Statistics. In the months ahead, two factors may affect retirees' cost of living, experts say. Tariffs may push inflation higher Inflation, as measured by the broader consumer price index, sank to its lowest 12-month rate at 2.3% in April since 2021. Yet tariffs may push the inflation rate higher in the months ahead, if those taxes imposed on imported goods go into effect. Tariffs would prompt higher consumer prices and inflation. If that happens in the months ahead, the Social Security cost-of-living adjustment estimate for 2026 may move higher. 'This year will be a closer year to watch because of the tariffs,' Johnson said of the 2026 COLA estimate, which is recalculated every month with new inflation data. The official COLA for the following year is typically announced by the Social Security Administration in October. Prescription drug costs President Donald Trump on Monday issued an executive order taking aim at high prescription drug costs in the U.S. The White House hopes to bring those prices in line with other countries. The policy would apply to Medicare and Medicaid, in addition to the commercial market, according to the White House. Changing drug prices would be unlikely to impact the COLA estimate, according to Johnson. But retirees would see an impact to their personal budgets if drug prices came down, she said. Many details of the executive order still need to be fleshed out, noted Leigh Purvis, prescription drug policy principal at the AARP Public Policy Institute. Yet the nonprofit organization, which represents Americans ages 50 and up, praised the Trump administration's efforts to curb big drug companies' ability to charge retirees high prices for necessary prescriptions. 'A lot of people are aware that prescription drug prices are too high, and I think a lot of people are aware that we're paying a lot more than other countries,' Purvis said. 'So any efforts moving us in the direction of paying less and paying something that's more comparable to the rest of the world, I think is something that people could probably get behind,' she said. READ SOURCE
Newsweek
13-05-2025
- Business
- Newsweek
Social Security COLA 2026 Increase Update as New Prediction Released
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Social Security recipients are likely to see the smallest cost-of-living adjustment (COLA) in five years in 2026, with new forecasts pegging the increase at 2.4 percent. The estimate, released by The Senior Citizens League (TSCL), is slightly up from April's 2.3 percent forecast but remains below the 2.5 percent adjustment awarded for 2025. This early prediction arrives as inflation continues to cool from pandemic-era spikes and as new economic policies—including a recent executive order from President Donald Trump—raise questions about future consumer costs. Why It Matters COLA affects more than 70 million Americans who receive Social Security benefits. The latest projection of a 2.4 percent adjustment for 2026 would mark the lowest since 2021, when benefits rose just 1.3 percent. It follows several years of elevated increases as a result of high inflation, including 5.9 percent in 2022 and 8.7 percent in 2023. While the modest forecast reflects slowing inflation, it also signals tighter financial conditions ahead for retirees whose budgets are sensitive to even small changes in benefit growth. The U.S. Social Security Administration logo is shown at the agency's office in Burbank, California, on November 5, 2020. The U.S. Social Security Administration logo is shown at the agency's office in Burbank, California, on November 5, 2020. VALERIE MACON/AFP via Getty Images What To Know "This year will be a closer year to watch because of the tariffs," Mary Johnson, an independent Social Security and Medicare analyst, told CNBC. The Social Security COLA is determined by comparing third-quarter year-over-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If inflation remains low, the adjustment remains minimal. The CPI-W rose 2.1 percent over the 12 months ending in April 2025, according to the Bureau of Labor Statistics. Johnson and TSCL both project a 2.4 percent increase, though they caution that the number could shift with economic fluctuations. Prescription drug costs may also play a role in retirees' actual cost of living. On May 12, President Donald Trump signed an executive order directing pharmaceutical companies to match U.S. drug prices to those in other countries or face payment caps from the federal government. "Any efforts moving us in the direction of paying less ... is something that people could probably get behind," Leigh Purvis, of AARP's Public Policy Institute, said on CNBC. What People Are Saying Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: "Cola will probably be insignificant given the fact grocery prices have risen so quickly. What many fail to understand about inflation, a 10 percent increase on prices followed by a much lower increase the following year is still an increase. Prices aren't coming down, just increasing more slowly." Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While a COLA decrease may be viewed by some retirees as a bad thing, it's actually a good one for the overall future economic outlook. The stabilization of COLA indicates that the pricing pressures of inflation are finally starting to [subside]. While seniors are undoubtedly still having to do more dollar counting than a few years ago, not having to dramatically increase beneficiary spending shows prices are stabilizing, even if they're still higher than they were five years ago." What Happens Next The official COLA for 2026 will be announced by the Social Security Administration in October 2025, based on inflation data through the third quarter. Analysts and advocacy groups will continue updating forecasts monthly. The Trump administration's prescription drug policy could trigger legal challenges and negotiation delays, while trade tariff developments may introduce additional volatility into consumer prices that ultimately influence the final COLA calculation. "The bigger likelihood from this COLA will come from those who 100 percent rely on Social Security," Thompson said. "It is a fact that prices are continually rising, and what you could buy for $100 at the grocery store just a few years ago is not the same amount today. There will be some cutbacks needed."
