Social security benefits may rise by nearly three percent next year from a cost of living adjustment (COLA) stemming from inflation, said The Senior Citizens League (TSCL).
TSCL points out that the final COLA for 2025 can differ from these estimates as inflation data keeps fluctuating throughout this year. As such, upward or downward adjustments to the 2.66 percent COLA estimate are possible.
The official COLA for 2025 will be announced by the Social Security Administration in October. Social security is paid out to more than 66 million beneficiaries.
Meanwhile, Shannon Benton, executive director of TSCL, pointed out that even with COLA increases, social security benefits are not helping beneficiaries cope with the rising cost of living.
“For 2024, the average Social Security benefit rose by $50.00, and after subtracting $9.80 to cover Medicare Part B Premium increases, the total change in benefits came out to just $40.20 a month. With the forecast of a 2.66 percent COLA for 2025, it appears seniors will continue to suffer financial insecurity as much next year as they have this year,” she said.
“In The Senior Citizens League’s 2024 Senior Survey, a concerning trend emerges as 71 percent of respondents highlight an increase in household costs exceeding the 3.2 percent COLA they received for 2023.”
Almost three in five seniors were facing financial difficulties, with one in five continuing to work despite collecting social security. An additional two in five seniors said they planned to get a job because of the modest COLA boost.
Due to financial pressure from inflation and weak COLA adjustment for 2024, 64 percent of seniors said they planned to cut back on discretionary spending and 36 percent on essentials.
Sixteen percent aimed to make use of community resources or assistance while 11 percent intended to shift to more affordable health care options.
“The 2024 COLA increase has illuminated significant financial stress among seniors collecting Social Security, highlighting the widening gap between Social Security benefits and the rising cost of living,” the survey report said.
Depleting Social Security
Concerns about COLA adjustments come as the future of social security is facing headwinds. A recent report from the Social Security Board of Trustees calculates that the system’s main trust fund will be depleted by 2035.Social Security is made up of two trust funds—the federal Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) programs. When the combined funds run dry in 2035, Social Security can only pay out 83 percent of scheduled benefits from that year onward.
Earlier this month, President Joe Biden proposed raising taxes on wealthier Americans in a bid to deal with the fund’s insolvency issues.
“I am committed to extending Social Security solvency by asking the highest-income Americans to pay their fair share without cutting benefits or privatizing Social Security,” he said.
Last year, a group of Democrat and independent senators proposed the Social Security Expansion Act seeking to raise payroll taxes on some of the highest earners in the United States, a move they claimed will keep the OASI fund solvent through 2096.
“The legislation that we are introducing today will expand Social Security benefits by $2,400 a year and will extend the solvency of Social Security for the next 75 years by making sure that the wealthiest people in our society pay their fair share into the system,” said Sen. Bernie Sanders (I-Vt.).
“Right now, a Wall Street CEO who makes $30 million pays the same amount into Social Security as someone who makes $160,000 a year. Our bill puts an end to that absurdity which will allow us to protect Social Security for generations to come while lifting millions of seniors out of poverty.”
This tax hike “on workers, savers, investors, and small business owners would distort positive activities and cause significant economic damage,” the foundation stated.
In a January 2023 video message, President Trump told Republicans that “under no circumstances” should they vote to reduce “a single penny” from social security.
The bill passed the House 96–0. While the bill eliminates state taxes on social security, beneficiaries still have to pay federal taxes on such receipts.
The tax cuts are expected to cost around $37 million per year in 2025 and 2026. It is projected to impact over 50,000 households in the state.
Some have opposed the measure. Kelly Allen, executive director of the West Virginia Center on Budget and Policy, said that “continued efforts to erode and eliminate the personal income tax are undermining our ability to meet the needs of seniors, children, and families across our state.”
