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Miami Herald
03-08-2025
- Business
- Miami Herald
BRN: The Social Security COLA and what it means
Since 1975, Social Security general benefit increases have been cost-of-living adjustments or COLAs (8%). Many people were disappointed when Social Security benefits only rose 2.5% at the start of the 2025. And, so far, next year's Social Security cost-of-living adjustment (COLA) does not look to be much higher. TheStreet's Maurie Backman joins Broadcast Retirement Network host Jeff Snyder to talk about the annual increase. Transcript: Jeff Snyder: This morning on BRN, the impacts of the 2025 Social Security COLA. Joining me now to discuss this and a lot more, Maurie Backman is a senior financial journalist. Maurie, happy new year. Great to see you. Thanks for joining us on the program this morning. Maurie Backman: Thanks so much for having me. I'm really excited to talk about Social Security because, you know, a new year means changes to the program, as always. Snyder: Yeah, let's talk about that, Maurie. And, you know, I think our audience is very familiar with your work because you've been on the program numerous times before. Let's talk about the cost of living adjustment or COLA for 2025. What is it and what does it mean? Backman: Sure. So years back, lawmakers decided that Social Security benefits were going to be eligible for automatic COLA. The COLA was going to be pegged to inflation so that, you know, inflation rises, benefits get a little bit of a boost. And when you think about it, I mean, it makes sense to have COLAs be automatic as opposed to needing, you know, Congress to vote in a raise to Social Security benefits year after year. It just makes the process a lot more seamless. And logically, you know, there are people who collect Social Security for 15, 20, 30 years, and the value of a dollar is going to get eroded over a period that lengthy. So we need Social Security COLAs to enable seniors to be able to maintain their buying power as living costs go up. So every year, Social Security gets a COLA. Well, actually, I shouldn't say that. Every year, Social Security is eligible for a COLA. When inflation remains flat, Social Security benefits remain flat. When there's a decrease in inflation from one year to the next, Social Security benefits also remain flat. Luckily, there's no such thing as a negative COLA. So you're not going to see your Social Security benefit decrease, thankfully, from one year to the next, even if inflation goes that route. You're only going to see your benefit stay the same or go up. Snyder: Yeah. And can you imagine, Mark, if there was a negative COLA and they started trying to reclaim Social Security benefits? Can you imagine all the people that would be lined up at the Social Security Administration? Good for them that they don't have a negative COLA. Maurie, let's talk about inflation because we have seen over the last year plus food prices increase, gasoline prices increase, other prices increase. How does this COLA factor that in and how does it compare maybe to previous years? Backman: Sure. So, you know, thankfully, inflation has cooled pretty nicely over the past year. We're not seeing the same levels of inflation that we did back in 2021 on the heels of all those stimulus policies. We're not seeing the same level of inflation as 2022. The funny thing about Social Security COLAs and inflation is that, you know, the way I've always tried to explain it is they sort of cancel each other out. So this year's COLA is 2.5%. Benefits are rising 2.5%. And a lot of seniors are, frankly, bummed about that because when we look back to recent COLAs, the year before benefits went up 3.2%. Before that, we had some of the largest COLAs in history. We had 8.7%. We had 5.9%. These were the COLAs that came about following that period of real rampant inflation that we saw following the pandemic. So, you know, a lot of people are pretty up in arms about this 2.5% COLA. Oh, it's not enough. It's such a measly little raise. But the thing to remember is that because COLAs are tied to inflation, when you have a not so generous COLA, it also means that inflation hasn't been all that bad. You kind of can't have one without the other. Right. So, you know, when seniors were seeing their benefits rise almost 6 percent or close to 9 percent, I mean, all those COLAs did was match inflation. So what you gain in one regard, you gain a higher boost, a larger boost to your Social Security benefit. You lose in the form of prices really going up a lot significantly from one year to the next. So in the past year, what we've seen is, yes, we have seen costs continue to go up. And look, I'm not retired, but I've seen my own bills increase exponentially. And I've got a family to feed. And it's stressful. It's stressful going to the supermarket and buying like six yogurts and a jug of milk and a loaf of bread. And it's like, that'll be $22.50. And it's like, what? This was like, these are groceries that I'm carrying out in my hand, you know, and a week's worth of food for my family. I mean, it seems like I'm paying more than ever. So I'm definitely sympathetic to seniors who feel that, you know, their 2.5 percent COLA is not really going to cut it for 2025. I can see where they're coming from because costs are still high. But things could also be worse. Related: Secretary Bessent's Social Security remarks spark AARP outcry Snyder: Well, they could be worse. Maurie, they could be a lot worse. I want to ask you about taxation, because how does taxation or does taxation factor into this cost of living adjustment? Does that mean anything to those directly taking Social Security? Backman: So it's a funny thing. So seniors are often shocked to learn that Social Security benefits can be taxable at the federal level. There can also be state taxes on Social Security, actually, depending on the state you live in and the amount of your total income. But the federal government can tax a portion of your Social Security benefits. And that doesn't sit well for a lot of seniors. It almost feels kind of like a double taxation, right? Because throughout our working years, we're all paying into Social Security on our wages. And, you know, the promise is that you're going to pay taxes, you're going to pay into Social Security, but then when you're older and retired, you're going to get a monthly benefit. And then it's like, hey, guess what? You're not necessarily going to keep that monthly benefit in full because once your income exceeds a certain threshold, a portion of your benefits can be taxed. Now, here's the problem. Social Security is eligible for an annual COLA, which means that benefits historically have risen from one year to the next. There have been a few years in history with a zero COLA. But for the most part, we have seen benefits rise from one year to the next. The problem is that the income thresholds that determine whether you're going to pay taxes on your Social Security benefits, those income thresholds have not increased since 1984. That's a long time ago. Snyder: I was 12. Backman: I was around. It was a long time ago. So, you know, when you kind of just then logically put those two pieces together, it's like, well, wait a minute, you know, Social Security benefits rise every year, and Social Security benefits are calculated in the formula that determines your income and that determines whether your income is high enough to have your benefits taxed, if you get what I'm saying. Basically, it's a concept called combined income. It's a factor of your adjusted gross income. It throws in any tax-exempt interest income you receive, like if you're a municipal bond investor, you might get some tax-free income. That's counted into your combined income and then also half of your annual Social Security benefit is factored into your combined income. And basically, if you're single, once your combined income is $25,000 or higher, you're going to be paying taxes on a portion of your Social Security benefits. Now, let's think about that. $25,000. I mean, you know, yes, that's factoring in half your annual Social Security benefit, but even if we want to pad that by another $10,000, $12,000, let's talk about $37,000 a year, $40,000 a year. Are you like rolling in dough at $40,000 a year? I'm not. Snyder: No, you're typically, you know, especially if you're a retiree, you're at a fixed income. And so, you know, one of the things I want to ask you about, I want to kind of close on this, is you talked about taxation now during the campaign, we're not a political show, but, you know, there were some policy preferences or suggestions about eliminating the tax on Social Security. First, Maurie, is that possible? And what would that mean to our conversation this morning about the cost of living adjustment? Related: Medicare beneficiaries quietly face looming crisis Backman: So, that's a tricky thing too, because so President-elect Trump had pledged to eliminate taxes on Social Security benefits. And a big part of me wants to say that that's a really good idea, because there's a lot of people whose income is really right above that threshold where they're liable for taxes, right? But since we just discussed that it was such a low threshold, these people cannot afford to lose some of their benefits to taxes. So, in that regard, I think eliminating taxes on Social Security benefits could be a positive thing. But then we also have to remember that Social Security doesn't just get funded by payroll taxes, it also gets funded by these taxes on benefits. Now, as it stands, we are already looking at a funding shortfall for Social Security. The program's combined trust funds are set to run dry in 2035. And at that point, benefit cuts could be on the table. So, now we have to balance the upside of not taxing Social Security so that seniors get to keep their benefits in full now versus the potential downside of, well, then what does that do to Social Security's overall financial picture? And what does that mean for benefit cuts down the line? It's a very tricky thing, and I do not envy lawmakers who have to make these decisions. And Jeff, to be clear, there's a push to not only end taxes on Social Security benefits, but also to change the way Social Security COLAs are calculated. That's a whole other issue because the reality is that the formula that's used now is not very beneficial to seniors. It really does not very accurately capture the costs that seniors specifically tend to incur. So, lawmakers really have their work cut out for them in the coming years with regard to Social Security. Snyder: They certainly do, Maurie. We've got a new Congress, a new president. Hey, look, they can't kick the can down the road too much longer because they're going to have to deal with other potential challenges. Maurie, it's always great to see you. Expert Analysis, as always. Thanks so much for joining us, and we look forward to having you back on the program again very soon. Backman: That's it. Snyder: And don't forget to subscribe to our daily newsletter, The Morning Pulse, for all the news in one place. Details, of course, at our website. And we're back again tomorrow for another edition of BRN. Until then, I'm Jeff Snyder. Stay safe, keep on saving, and don't forget, roll with the changes. Related: Jean Chatzky shares retirement tips on Social Security, Medicare The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
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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Yahoo
13-06-2025
- Yahoo
Former OPSO employee arrested, accused of conspiring to bring drugs into Orleans Parish jail
NEW ORLEANS (WGNO) — A former Orleans Parish Sheriff's Office employee is in custody after allegedly conspiring to bring drugs into the jail. OPSO officials say 24-year-old Iyanna Carter reportedly made the plan with inmate 31-year-old Henry Sims. Man accused of stabbing girlfriend multiple times in Slidell Deputies said as a result, two inmates suffered non-fatal overdoses on May 30. Both were treated with several doses of Narcan and taken to a hospital where they recovered. The two are now back in deputy custody. OPSO Sheriff Susan Hutson said the arrest sends a clear message. 'We will not tolerate anyone, inside or outside our organization, who jeopardizes the safety and security of this facility. And, we are committed to accountability at every level and to protecting both our residents and our staff. I'm proud of the quick response by our Investigative Services Bureau and the Intelligence Division in identifying suspicious behavior and actions by a former employee and swiftly closing down this conspiracy to bring dangerous drugs into the jail,' said Hutson. OPSO officials said Carter has since been fired, and on June 12, she was arrested and booked into the Orleans Justice Center on felony charges of: Introduction of a controlled substance into a correctional facility (two counts) Malfeasance in office (two counts) Criminal conspiracy (two counts) NOPD officials release footage from officer-involved shooting incident OPSO Compliance and Accountability Director Major Silas E. Phipps, Jr. says the integrity of the facility depends on the integrity of those who work in it. 'This case is a reminder of why our internal controls and ongoing compliance efforts matter. When misconduct happens, we will investigate it and we will act on it,' said animals come out to play at Yellowstone National Park – but don't get too close How to watch military parade on Trump's birthday Body exhumed in hopes of solving 54-year-old Illinois mystery Omaha Bound: Inside the Men's College World Series Social Security COLA increase: Senior group issues projection, but warns of potential new 'problems' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
CNBC
11-06-2025
- Business
- CNBC
Social Security cost-of-living adjustment may be 2.5% in 2026, new estimates find
Millions of Social Security beneficiaries received a 2.5% boost to their benefits in 2025, thanks to an annual cost-of-living adjustment that went into effect in January. In 2026, Social Security checks may go up by the same amount — 2.5% — based on the latest government inflation data, according to new estimates from both The Senior Citizens League and Mary Johnson, an independent Social Security and Medicare policy analyst. That is up from the 2.4% increase for 2026 that those sources forecast last month. A 2.5% cost-of-living adjustment would be "about average," according to Johnson. The Social Security cost-of-living adjustment, or COLA, is an annual adjustment to benefits aimed at helping to ensure monthly checks keep pace with inflation. The COLA for the following year is calculated based on third quarter inflation data. The official change is typically announced by the Social Security Administration in October. With four more months of data yet to come before that calculation, the new estimate for the Social Security COLA for 2026 is subject to change. The COLA may go higher if President Donald Trump's tariff policies prompt inflation and consumer prices move higher, according to Johnson. Broadly, the consumer price index rose less than had been expected in May, with an annual inflation rate of 2.4%, showing limited impact from Trump's tariff policies. The measure used to calculate the Social Security COLA — the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W — is up 2.2% over the past 12 months, according to the May data. While that inflation rate is lower than the 2.5% COLA for 2025, a Senior Citizens League survey finds 80% of seniors feel inflation in 2024 was more than 3% based on their expenses. As the Trump administration has reduced the size of the federal work force, that has also led to changes in the way the Bureau of Labor Statistics assesses inflation. The government agency has restricted data collection and turned to models that help fill in incomplete data. More from Personal Finance:Here's the inflation breakdown for May 2025 What's happening with unemployed Americans — in five chartsHow investors have performed amid Trump market volatility The Senior Citizens League has raised concerns that those changes may negatively influence the accuracy of the annual Social Security COLA calculations. "Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that's lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement," Shannon Benton, executive director at The Senior Citizens League, said in a statement. The Bureau of Labor Statistics did not immediately respond to CNBC's request for comment.
Yahoo
04-06-2025
- Business
- Yahoo
Social Security COLA 2026: Will Tariffs Impact It?
The cost-of-living adjustment (COLA) for 2026 is projected to be the lowest in five years at 2.4%, according to NBC New York. That would be one-tenth of a percent lower than 2025's COLA, 2.5%, potentially lowering Social Security increases for seniors, survivors and disabled beneficiaries. Be Aware: Try This: In April 2025, inflation decreased to 2.3%. But what does this mean for retirees living on a fixed income? Before you panic, know the rate isn't set in stone. If tariffs increase inflation in the next six months, the COLA for 2026 could change. Another factor is prescription drug costs, NBC New York reported. Here's a closer look at these impacting factors. Inflation dropped to a 12-month low of 2.3% in April, the slowest pace seen since 2021, based on the consumer price index. However, that downward trend could reverse if new tariffs on imported goods lead to inflationary pressure. Tariffs often lead to higher costs for businesses, which tend to pass these expenses on to consumers, which could drive prices — and inflation — back up in the coming months. If inflation starts to rise again, it could influence the projected 2026 COLA for Social Security beneficiaries. COLA estimates are updated monthly, as new inflation data is released. Read Next: Another factor that could contribute to inflation is the rising costs of prescription drugs. But that may be changing. On May 12, 2025, President Donald Trump issued an executive order to lower prescription drug costs. The order stated that pharmaceutical companies 'deeply discount' drug prices to foreign markets and aims to make other countries to pay their fair share. Still, even if drug prices drop, it's unclear how much that would affect COLA and retirees' expenses in general at this time. It should become clearer how inflation and drug prices unfold in the upcoming months. Although experts can speculate, they won't know for certain until Social Security announces the official 2026 COLA report in October 2025. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on Social Security COLA 2026: Will Tariffs Impact It?
