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Newsweek
a day ago
- Business
- Newsweek
Social Security Update: 2026 COLA Payments Could Rise
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. The Senior Citizens League (TSCL) has predicted that Social Security's 2026 Cost-of-Living Adjustment (COLA) will be 2.5 percent, up from April's prediction of 2.4 percent. While May's prediction is slightly up from March's 2.3 percent forecast, it has not surpassed the 2.5 percent adjustment awarded for 2025, although TSCL's predictions have now increased for four consecutive months. Why It Matters This early prediction arrives as inflation continues to settle after pandemic-era spikes. After increases of 5.9 percent in 2022 and 8.7 percent in 2023, the predictions for 2026 mark a clear drop in inflation. COLA affects more than 70 million Americans who receive Social Security benefits, and while the modest forecast suggests promising signs of dropping inflation, there still could be tighter financial conditions ahead for retirees, whose budgets are sensitive to even small changes in benefit growth. File photo: a sign is viewed outside of the Social Security Administration offices. File photo: a sign is viewed outside of the Social Security Administration offices. Phelan M. Ebenhack/AP What To Know TSCL, one of the country's largest nonpartisan seniors groups, unveiled its May forecast on June 11. The COLA is calculated by averaging third-quarter inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of the average change in prices paid for a basket of goods and services purchased by urban workers. However, the TSCL also said in its report that the Bureau of Labor Statistics faces "unprecedented challenges collecting data for the price index used to calculate the COLA." The U.S. Bureau of Labor Statistics shared a notice on June 4, saying that it was "reducing sample in areas across the country." A number of cities had already been suspended from Consumer Price Index collection entirely in April. These cities included Lincoln, Nebraska, and Provo, Utah. In June, the bureau suspended collection entirely from Buffalo, New York. According to the Wall Street Journal, the bureau reportedly told outside economists that the federal hiring freeze had meant the agency was forced to cut back on the number of businesses where it checks prices, and that in April less accurate methods for predicting price changes were used. Newsweek has contacted the Bureau of Labor Statistics outside of regular working hours via email for comment. As the Consumer Price Index, calculated by the Bureau of Labor Statistics, is used as part of the calculation for COLA, this could have knock-on effects for predictions. TSCL said in its report: "Problems with CPI data could spell problems for American seniors. Putting less reliable data into the CPI makes it a less reliable measure of inflation, and seniors already have their doubts." What People Are Saying The Senior Citizens League said in its report: "If the government fails to act and the CPI's data quality begins to erode, it increases the likelihood of the government providing a COLA that doesn't match inflation. While there's a chance that any miss could be higher than actual inflation, it's just as likely that a miss would be low. A COLA that comes in under inflation would set seniors back for the rest of their retirement, as Social Security checks compound over time with each additional COLA." The U.S. Bureau of Labor Statistics said in its June 4 notice: "Sample reduction and collection suspension affect both the commodity and services survey and the housing survey. These actions have minimal impact on the overall all-items CPI-U index, but they may increase the volatility of subnational or item-specific indexes. The number of imputed items and the response rates increased in April due to these actions. BLS makes reductions when current resources can no longer support the collection effort. BLS will continue to evaluate survey operations." 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.
New York Post
2 days ago
- Business
- New York Post
GOP Sen. Josh Hawley teams up with Dem to hike federal minimum wage to $15 per hour
Sens. Josh Hawley, R-Mo., and Peter Welch, D-Vt., are pushing legislation that would hike the federal minimum wage to $15 per hour and provide for annual increases to account for inflation. The proposal would implement a dramatic increase from the current $7.25 per hour federal minimum wage, which has been in place for more than 15 years. 'For decades, working Americans have seen their wages flatline. One major culprit of this is the failure of the federal minimum wage to keep up with the economic reality facing hardworking Americans every day. This bipartisan legislation would ensure that workers across America benefit from higher wages,' Hawley said, according to press releases from both lawmakers. The purchasing power of the U.S. dollar has eroded significantly over the years due to inflation. Under the proposed legislation, the yearly increases to the initial $15 per hour federal minimum wage would be based on 'the percentage increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical Workers (or a successor index), as published by the Bureau of Labor Statistics' and would be 'rounded to the nearest multiple of $0.05, if the amount … is not a multiple of $0.05.' 3 'This bipartisan legislation would ensure that workers across America benefit from higher wages,' Senator Josh Hawley said about legislation that would hike the federal minimum wage to $15 per hour. Jack Gruber-USA TODAY via Imagn Images 3 The legislation, which would also provide for annual increases to account for inflation, is supported by Senator Peter Welch. AP 3 The purchasing power of the U.S. dollar has decreased over the years due to inflation. Amy Covington/Stocksy – 'We're in the midst of a severe affordability crisis, with families in red and blue states alike struggling to afford necessities like housing and groceries. A stagnant federal minimum wage only adds fuel to the fire. Every hardworking American deserves a living wage that helps put a roof over their head and food on the table–$7.25 an hour doesn't even come close,' Welch said, according to the releases. 'Times have changed, and working families deserve a wage that reflects today's financial reality. I'm proud to lead this bipartisan effort to raise the minimum wage nationwide to help more folks make ends meet,' the senator added. In post on X, conservative commentator Dana Loesch decried the idea of raising the federal minimum wage, pushing back against Hawley's advocacy for the policy. 'This is a horrible, progressive idea,' Loesch asserted in the tweet.
Yahoo
17-02-2025
- Business
- Yahoo
Here's Why Retirees on Social Security Were Just Dealt a Major Blow
When the Social Security Administration (SSA) announced last October that benefits would only be rising by 2.5% in 2025, a lot of people were disappointed. And that's understandable since that 2.5% cost-of-living adjustment, or COLA, is the smallest raise to arrive in years. Now the reality is that a smaller COLA is indicative of cooling inflation. So in reality, seniors on Social Security should be breaking even in that regard. In other words, their benefits aren't up so much this year, but living costs should be moderating. Or at least that's the way things are supposed to work in theory. In practice, seniors on Social Security risk losing out on buying power in the near term thanks to an economic factor outside their control. In January, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 3% on a year-over-year basis. Why is this important? The CPI-W is the index used to calculate COLAs each fall. Specifically, third-quarter data from that index is compared to data from a year prior. If there's a rise in the CPI-W from one year to the next, Social Security benefits increase. However, the problem with Social Security COLAs is that they're backward-facing. That is, they're based on previous inflation data. So it's more than possible for a COLA to be announced in October only for inflation to then pick up in the months that follow. That's what's happening here. Since Social Security's 2025 COLA was announced, annual inflation has risen beyond the 2.5% mark. So now, seniors who get most or all of their income from Social Security are in a really tough spot. It's best not to retire on Social Security alone for a number of reasons. First, those benefits will only replace about 40% of your previous wages if you earn a typical paycheck. And also, Social Security's COLAs have long failed to adequately keep up with inflation despite being designed to do just that. That's why it's optimal to have savings to fall back on in retirement. But if you're already retired and missed that boat, all isn't lost. For one thing, you could try rethinking some of your expenses and seeing if there's room to make cuts in your budget. It may, for example, be possible to unload a car and rely on public transportation and rides from others if you really think about it. That could save you the cost of auto insurance, maintenance, and fuel -- not to mention a potential car payment if your vehicle isn't paid off already. You can also work on a part-time basis to boost your income. And the good news is that it's permissible to work while collecting Social Security. However, if you haven't yet reached full retirement age (FRA), you'll be subject to an earnings test. And exceeding the limit that applies to you under the earnings test could mean having some of your Social Security benefits withheld. So you will need to be mindful of how much you're earning at a part-time job. Also, if the idea of a traditional part-time job isn't appealing, you can turn to the gig economy for extra income. That could give you the chance to make money doing something enjoyable. It's too soon to predict how inflation will trend for the rest of the year. But from a Social Security COLA standpoint, things are off to a rocky start for seniors. So it's best to get ahead of that situation in case inflation continues to wreak havoc. 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 Motley Fool has a disclosure policy. Here's Why Retirees on Social Security Were Just Dealt a Major Blow was originally published by The Motley Fool Sign in to access your portfolio
