Latest news with #SocialSecurityBoardofTrustees
Yahoo
11-07-2025
- Business
- Yahoo
The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase.
The annual Social Security COLA is based on inflation during July, August, and September. The Board of Trustees files a report with Congress every year, including a forecast for the COLA. Expectations for the annual cost of living adjustment have climbed since last year's report. The $23,760 Social Security bonus most retirees completely overlook › One of the most important pieces of Social Security retirement benefits is the annual cost-of-living adjustment, or COLA. Without the COLA, many seniors would face significant shortfalls in their retirement budgets as prices for housing, healthcare, and groceries increase over time. Over the last few years, as inflation has reared its ugly head, many retirees have come to rely more and more on the annual COLA. While we're still months away from the official announcement for next year's COLA, multiple analysts have published their best estimate for what kind of pay bump retirees could receive next year. Estimates from The Senior Citizen's League and independent analyst Mary Johnson both put the number at 2.5% in their most recent reports. The Social Security Board of Trustees, the people in charge of the trust fund and who report on the financial status of the program to Congress, have their own estimate they publish once per year. They just published their 2025 annual report, and they have a new COLA estimate for 2026 that differs from the third-party estimates. The annual COLA figure is released around the same time every year in the second week of October. That's because the COLA is based on data collected over the summer between July and September. Specifically, it's based on the year-over-year increase in a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Every month, the Bureau of Labor Statistics surveys thousands of prices around the country for everything from apples to water bills. To calculate the CPI-W, each price is weighted by its relative portion of a standard budget for a working-age city dweller. The results are usually compiled and published by the second week of the following month. The Social Security COLA is based on the average year-over-year increase in the CPI-W during the third quarter of the year, which ends in September. When the September CPI-W number gets published in October, the Social Security Administration is able to announce the COLA that will go into effect for benefits payments that begin the following January. When the Social Security Board of Trustees publishes its annual report, it includes multiple estimates for the COLA. There's a high-cost, low-cost, and intermediate estimate. These are based on the net cost of each scenario to Social Security based on both outflows (benefits payments) and inflows (tax revenue). The high-cost estimate is actually the case where the COLA is lowest. While Social Security will pay out less in benefits in that case, low inflation will also curb how much wages rise and in turn how much Social Security will collect in revenue. And since there are more workers paying into Social Security than retirees collecting benefits, a super low inflation environment can be bad for the overall health of Social Security. The board updates its COLA estimates each year along with its full outlook for Social Security and if and when the program will deplete its trust fund. Here are its 2026 COLA estimates from May 2024 and its most recent update from June 2025. Case May 2024 June 2025 High-cost 1.8% 2.4% Intermediate 2.2% 2.7% Low-cost 3% 3% Source: Social Security Administration. As you can see, the board has raised its estimate for the 2026 COLA significantly since last year. It's worth pointing out that many analysts, not just the trustees, expected inflation to fall faster than it has since last year. The Federal Reserve has tried to tame inflation by keeping rates higher for longer. At the start of last year, investors were thinking the Fed would cut rates by 150 basis points by the end of 2024. It only cut 100 basis points, and it signaled fewer-than-expected rate cuts this year, too. On top of that, there's a growing amount of uncertainty driven by the Trump administration's constantly changing trade policies and ongoing conflicts in Europe and the Middle East. As such, there's a good chance we see a pickup in inflation this summer, pushing the COLA higher. That said, the trustees' intermediate estimate for the 2025 COLA was 2.6%, but retirees only ended up with a 2.5% bump. So, it's possible the trustees are overestimating how much prices will increase this summer. As things stand, though, Social Security beneficiaries should expect to see a bump somewhere between 2.4% and 3% based on all the data available. 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Epoch Times
09-07-2025
- Business
- Epoch Times
Another Grim Report From Social Security Trustees
I'm a little late in getting to this issue. But as the old adage goes—better late than never. This column is going to be about the annual report of the Social Security Board of Trustees concerning the financial health of the program. (More about this board at the end of the column.) The trustees' report came out a couple of weeks ago and made news for a day or two. I think the ho-hum reaction from the public to this report is partly because, as has been the case for many years now, the report says the Social Security trust funds are like a ticking doomsday clock. And the trustees have always urged action by the president and Congress to do something before the clock strikes midnight. And then nothing gets done! So, the public goes 'ho hum!' I'll have some comments about how easy it would be to shore up Social Security financing at the end of this column.
Yahoo
08-07-2025
- Business
- Yahoo
A Change in Social Security Benefits Caused A Measure of Americans' Income to Fall
Personal income in May dipped for the first time since 2021, according to government data, but people aren't actually getting paid less. Income fell by 0.4% in May after climbing 0.8% in April, but it was a change in Social Security payouts that drove that decline. 'The outsize income gain in April was primarily pushed up by a one-time spike in Social Security benefits from the implementation of the Social Security Fairness Act,' said senior director of Moody's Analytics Dante DeAntonio. The Social Security Fairness Act, a Biden-era piece of legislation that went into effect at the beginning of this year, increased the benefits for more than 2.8 million former public-sector workers whose jobs were not previously covered by Social Security. One-time retroactive checks were mailed to beneficiaries in late March and April, giving those individuals a one-time boost in monthly income. That's why it appeared as though income fell in May. Starting in May, the increased benefits will be factored in monthly, so the income data for the rest of the year should level off. A recent report from the Social Security Board of Trustees said that the program's funds could be depleted by 2034. Read the original article on Investopedia
Yahoo
08-07-2025
- Business
- Yahoo
A Change in Social Security Benefits Caused A Measure of Americans' Income to Fall
Personal income in May dipped for the first time since 2021, according to government data, but people aren't actually getting paid less. Income fell by 0.4% in May after climbing 0.8% in April, but it was a change in Social Security payouts that drove that decline. 'The outsize income gain in April was primarily pushed up by a one-time spike in Social Security benefits from the implementation of the Social Security Fairness Act,' said senior director of Moody's Analytics Dante DeAntonio. The Social Security Fairness Act, a Biden-era piece of legislation that went into effect at the beginning of this year, increased the benefits for more than 2.8 million former public-sector workers whose jobs were not previously covered by Social Security. One-time retroactive checks were mailed to beneficiaries in late March and April, giving those individuals a one-time boost in monthly income. That's why it appeared as though income fell in May. Starting in May, the increased benefits will be factored in monthly, so the income data for the rest of the year should level off. A recent report from the Social Security Board of Trustees said that the program's funds could be depleted by 2034. Read the original article on Investopedia Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
25-06-2025
- Business
- Yahoo
Social Security's funding crisis is a year closer — and Trump's approach will make it worse
The Social Security Board of Trustees said last week that the program's combined trust funds will run out of money in 2034 — one year earlier than was projected in 2024. Without a fix, the trustees' report said, the venerable program may have to reduce retirement benefits by almost one-fourth in less than a decade. Though Social Security counts over 73 million people as beneficiaries, the news went largely unremarked in Washington. And to be fair, there's been a lot going on. But soon enough, Social Security will face a funding crisis — and President Donald Trump's approach will only make matters worse. First, a bit of a background: Social Security is (primarily) a pay-as-you-go system — payroll taxes on today's workers fund benefits for today's retirees. From 1983 — the last time the program's finances were overhauled — until 2021, Social Security took in more than it paid out. Beginning that year, thanks to demographic changes, benefits exceeded revenues, and Social Security began drawing down its two trust funds, one for disability benefits and a much larger one for retiree and survivor benefits. The trust fund for retirement benefits is projected to be depleted in 2033, and drawing on the disability trust fund (which requires congressional approval) buys Social Security only an extra year. The immediate cause of the depletion date's moving forward was the Social Security Fairness Act, which eliminated provisions that reduced benefits for teachers, firefighters, police officers and other public workers who receive pensions. That law, which passed Congress with bipartisan majorities in both chambers, brought the depletion date forward by about six months. But the new law is just a fraction of the total shortfall — an average of about $330 billion per year over the next 75 years. If nothing is done, retirement benefits won't disappear entirely, but only 77% of those benefits would be payable, according to the trustees' report. Any interruption or significant reduction in benefits would be catastrophic for millions of people. As of 2015, Social Security provided at least half the income of roughly 40% of retirees (and at least 90% of the income for 1 in 7 retirees). What has the president done about this? Trump has plunged ahead with policy proposals that, as I wrote last fall, risk moving the depletion date closer. Mass deportations will reduce the workforce paying into Social Security (including undocumented immigrants, who paid billions in Social Security taxes and don't receive benefits). If, as both the Federal Reserve and many experts fear, Trump's tariff policies increase inflation, that would push up the program's cost-of-living adjustments. When Trump and his allies do talk about Social Security, they say they're going after 'waste, fraud and abuse.' In his address to Congress this year, Trump repeated claims about Social Security going to 'millions and millions of dead people' — claims debunked by his own Social Security Administration. The SSA's acting inspector general reported in February that overpayment of benefits averaged $3.4 billion per year for the last four years. For context, the cost of the entire program in 2024 was nearly $1.5 trillion. Furthermore, as Gopi Shad Goda and Lily Nevo of the Brookings Institution pointed out last week, 'Social Security is already a lean operation'; 99.5 cents of every dollar that the program spends goes to beneficiaries. Even before the second Trump White House imposed deep staff cuts, the Social Security Administration had fewer employees and fewer field offices than in 2010. With wait times for claims already increasing, further cuts to the SSA would only worsen beneficiary service. If 'waste, fraud and abuse' can't make ends meet, what do Republicans have to offer? If you guessed 'cuts,' you're right. Last spring, then-candidate Trump told CNBC 'there is a lot you can do' to cut Social Security. A week later, the Republican Study Committee, which represents most of the House GOP caucus, released a budget that would raise the retirement age and reduce benefits for high earners (though, recognizing the politics at play, the RSC also said benefits would not change 'for any senior in or near retirement'). Speaking of politics, Americans are unusually uniform in their views on Social Security cuts, and they do not agree with Republican politicians. In a Pew Research poll taken last year, for instance, 79% of Americans (including 77% of Republicans) opposed any benefit reductions, and other polls find similarly strong opposition. A 'Blueprint for a Bipartisan Solution' from the Brookings Institution, for instance, would cut wealthier beneficiaries' earnings, but it otherwise would achieve solvency through other methods, including raising the payroll tax cap, slightly increasing the payroll tax itself and (unlike the Trump administration) encouraging legal immigration. And then there's the Social Security Expansion Act, introduced by Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., which would, in Warren's words, 'make the wealthiest Americans pay a fairer share.' That bill would apply the payroll tax on all income (including capital gains) above $250,000 a year. Not only would this proposal, according to an SSA analysis, keep the trust funds solvent, but Sanders and Warren's bill would increase benefits by $200 a month. 'How did you go bankrupt?' one character asks another in Ernest Hemingway's 'The Sun Also Rises.' The other replies, 'Two ways: gradually and then suddenly.' Social Security won't go bankrupt, but its funding shortfall is approaching in much the same fashion. And unless Trump acts with uncharacteristic sanity, the next president and the accompanying Congresses will have to clean up the mess he helped make. This article was originally published on
