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The Hill
a day ago
- Business
- The Hill
Social Security COLA projected to be slightly higher than 2025's, but ‘many will be disappointed,' group says
(NEXSTAR) – The Senior Citizen's League is pretty confident that many seniors receiving Social Security benefits will be 'disappointed' by next year's cost-of-living increase. In its latest projection, the senior advocacy group estimated that the 2026 cost-of-living adjustment (COLA) would amount to a 2.7% increase. This marks a bump over the increase that retirees saw in 2025 (2.5%), but it's still not enough to cover the ever-rising costs of goods and services that seniors are paying, TSCL believes. 'While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed,' Shannon Benton, the executive director of TSCL, was quoted as saying in a press release issued this week. 'TSCL's research shows that many seniors believe the COLA does not adequately capture the inflation they experience.' Senior group proposes 'one-time catch-up payment' for Social Security beneficiaries The research Benton refers to includes a survey of nearly 2,000 beneficiaries. Of those participants, 94% said they felt this year's COLA increase of 2.5% 'was too low and that their monthly Social Security checks would fall behind.' The survey also indicated that 57 percent of seniors live on less than $2,000 per month, and a good chunk of that group (about a fifth) said they spent half that on healthcare costs alone. These issues, TSCL argues, don't stem only from lower-than-desired COLA increases, but rather how those increases are calculated in the first place. TSCL has long argued that the metrics used to calculate the annual COLA (i.e., the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners, which itself is a measure of the change in prices for common consumer goods and services) do not take into account the costs that elderly Americans are paying for things like medicine, housing and groceries. In the aforementioned survey, the vast majority of Social Security beneficiaries agreed that the Bureau of Labor Statistics should consider using another set of data to calculate the COLA, like the Consumer Price Index for the Elderly, which focuses on costs affecting Americans ages 62 and up. In the absence of any real movement on that idea, TSCL has also been advocating for a 'one-time catch-up payment' of $1,400 to be sent to everyone who qualifies for Social Security, pointing to 2009's Economic Recovery Payments or the COVID-era Economic Impact Payments as evidence of the government's previous efforts to provide direct financial assistance to citizens. 'A catch-up payment would help restore that lost value and provide urgently needed relief for retirees living on fixed incomes.' A representative for the Social Security Administration did not return a request for comment on the proposal. The amount of next year's COLA increase won't be officially announced by the Social Security Administration until October. The 2026 increase is based on Labor Department data from the third quarter (July, August and September) of 2025.
USA Today
05-07-2025
- Business
- USA Today
Latest 2026 COLA estimate: What a 2.5% Social Security raise could mean for you
To keep pace with rising prices, Social Security applies an annual cost-of-living adjustment (COLA) that takes effect in January each year. The Senior Citizens League (TSCL), a nonprofit organization that advocates for senior rights, publishes COLA estimates based on inflation data. In its latest forecast, released on June 11, TSCL predicts a 2.5% COLA for 2026 — the same as 2025, but below the 3.4% average since 1975. The official COLA won't be announced by the Social Security Administration (SSA) until October, but it's worth paying attention to estimates, so current and soon-to-be retirees can begin planning their finances accordingly. How Social Security determines the annual COLA To determine the percentage to set the COLA at each year, Social Security considers the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is a measure of inflation published monthly by the Bureau of Labor Statistics (BLS). It looks at the prices of common expenses, such as housing, food, transportation and medical care. Here are the steps that Social Security follows to calculate the COLA: For example, if the CPI-W average from the current year is 3% higher than the previous year, the COLA going into the next year will be set at 3%. How has the COLA shaped up in recent years? Although Social Security retirement benefits began in 1940, the annual COLA wasn't a thing until 1975. Since then, the average annual COLA has been 3.4%, but the amounts have varied widely. The highest COLA ever was in 1980, at 14.3%. The lowest COLAs were in 2010, 2011 and 2016, when there were no benefit increases. Here are the past 10 COLAs: Data source: SSA. Is the CPI-W the best metric to use for determining the COLA? The annual COLA is appreciated, but it hasn't always kept up with inflation enough to reasonably cancel it out. According to TSCL, the buying power of Social Security benefits has decreased by 20% since 2010. This means that $1 in benefits then would be worth around $0.80 now. Not ideal. One issue that has been raised is that the CPI-W may not be the best inflation measure when considering expenses common among retirees. For example, the CPI-W doesn't include certain healthcare costs, such as long-term care and prescription drugs, which are a major expense for many retirees. One change that has been proposed is using the Consumer Price Index for the Elderly (CPI-E) — which applies to people age 61 and older — to determine the annual Social Security COLA. The CPI-E gives more weight to healthcare and housing costs, and typically comes in higher than CPI-W data. A study by the Congressional Research Service (CRS) showed that using CPI-E versus CPI-W would have resulted in larger COLAs and higher monthly Social Security benefits. Since 1986, a COLA based on the CPI-E would've been the same or higher than the actual COLA in all but six years. There's no telling if the COLA process will get revamped, so for now and the foreseeable future, we're stuck with using CPI-W data. It's far from perfect, but it's the reality for right now. The best thing retirees can do is prepare for what could possibly be a below-average COLA and begin planning accordingly. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $23,760 Social Security bonus most retirees completely overlook Offer from the Motley Fool: 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. One easy trick could pay you as much as $23,760 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. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
Yahoo
30-06-2025
- Business
- Yahoo
Social Security COLA Estimates Are Out -- How Do They Compare to Past Years?
The Social Security cost-of-living adjustment (COLA) is meant to offset inflation. The projected COLA for 2026 is below the average COLA since 1975. Some have recommended using the CPI for the Elderly to determine the COLA. The $23,760 Social Security bonus most retirees completely overlook › To keep pace with rising prices, Social Security applies an annual cost-of-living adjustment (COLA) that takes effect in January each year. The Senior Citizens League (TSCL), a nonprofit organization that advocates for senior rights, publishes COLA estimates based on inflation data. In its latest forecast, released on June 11, TSCL predicts a 2.5% COLA for 2026 -- the same as 2025, but below the 3.4% average since 1975. The official COLA won't be announced by the Social Security Administration (SSA) until October, but it's worth paying attention to estimates, so current and soon-to-be retirees can begin planning their finances accordingly. To determine the percentage to set the COLA at each year, Social Security considers the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is a measure of inflation published monthly by the Bureau of Labor Statistics (BLS). It looks at the prices of common expenses, such as housing, food, transportation, and medical care. Here are the steps that Social Security follows to calculate the COLA: Average the CPI-W data for the third quarter (July, August, and September) of the current year. Compare the current year's average to the average of the previous year. If it increased, set the COLA to match the percentage increase; if it decreased or remained the same, there is no COLA. For example, if the CPI-W average from the current year is 3% higher than the previous year, the COLA going into the next year will be set at 3%. Although Social Security retirement benefits began in 1940, the annual COLA wasn't a thing until 1975. Since then, the average annual COLA has been 3.4%, but the amounts have varied widely. The highest COLA ever was in 1980, at 14.3%. The lowest COLAs were in 2010, 2011, and 2016, when there were no benefit increases. Here are the past 10 COLAs: Year Percentage 2025 2.5% 2024 3.2% 2023 8.7% 2022 5.9% 2021 1.3% 2020 1.6% 2019 2.8% 2018 2% 2017 0.3% 2016 0% Data source: SSA. The annual COLA is appreciated, but it hasn't always kept up with inflation enough to reasonably cancel it out. According to TSCL, the buying power of Social Security benefits has decreased by 20% since 2010. This means that $1 in benefits then would be worth around $0.80 now. Not ideal. One issue that has been raised is that the CPI-W may not be the best inflation measure when considering expenses common among retirees. For example, the CPI-W doesn't include certain healthcare costs, such as long-term care and prescription drugs, which are a major expense for many retirees. One change that has been proposed is using the Consumer Price Index for the Elderly (CPI-E) -- which applies to people age 61 and older -- to determine the annual Social Security COLA. The CPI-E gives more weight to healthcare and housing costs, and typically comes in higher than CPI-W data. A study by the Congressional Research Service (CRS) showed that using CPI-E versus CPI-W would have resulted in larger COLAs and higher monthly Social Security benefits. Since 1986, a COLA based on the CPI-E would've been the same or higher than the actual COLA in all but six years. There's no telling if the COLA process will get revamped, so for now and the foreseeable future, we're stuck with using CPI-W data. It's far from perfect, but it's the reality for right now. The best thing retirees can do is prepare for what could possibly be a below-average COLA and begin planning accordingly. 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 $23,760 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. Social Security COLA Estimates Are Out -- How Do They Compare to Past Years? was originally published by The Motley Fool 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
