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Social Security, SSI Increase May Disappoint

Social Security, SSI Increase May Disappoint

Social Security and SSI benefits are expected to rise again next year, according a new estimate, but probably not by as much as last time. (Disability Scoop)

Inflation is still kicking — but the projected Social Security cost-of-living adjustment (COLA) rate is still lower than its 2024 counterpart.

The Senior Citizens League (TSCL), one of the country’s largest nonpartisan senior citizens groups, has released a new COLA estimate for 2025 — and it dropped from their May prediction.

TSCL’s June estimate came in at a 2.57% increase according to a written statement, while their May iteration hovered at 2.66%. This is even lower than the average COLA increase: 2.6%.

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The TSCL additionally commented in a statement that “just one of the five COLAs implemented so far in the 2020s (20%) has outpaced inflation, compared to 40% in the 2010s and 60% in the 2000s and 1990s.”

In 2024, the COLA for Social Security recipients came in at 3.2%.

For those who may not know, due to Social Security amendments that passed in 1972, COLA increases the amount Social Security recipients get each year, and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a federal measurement that estimates the cost of a basket of goods for the average wage earner.

Despite the decrease from May’s projection, June’s calculation is still a hair higher than the Congressional Budget Office’s (CBO) annual prediction, which was released in a February dataset. They are forecasting a 2.5% increase for 2025 — but keep in mind that the CBO and TSCL employ different methodologies, and there are a few months to go before the final COLA boost is calculated for 2025.

About cost-of-living adjustments

Social Security benefits and Supplemental Security Income (SSI) payments are subject to an annual COLA based on inflation rates to ensure that monthly payments keep pace with rising costs.

In October of 2023, the Social Security Administration (SSA) announced that beneficiaries will see a 3.2% increase for 2024, raising the average monthly payment for Social Security benefits by more than $50 and the maximum SSI payment by $30.

Cost-of-living adjustments are determined using third-quarter data — July, August and September — from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Inflation for those three months is added together, averaged and then compared to the previous year’s third-quarter average, with the percentage difference between the current year and the previous year serving as the COLA rate for the upcoming year.

In recent years, the COVID-19 pandemic’s impact on inflation led to abnormally high adjustments, including a 5.9% increase in 2022 and an 8.7% increase in 2023, which was the largest increase in four decades.

Reductions in inflation in 2023 brought 2024’s adjustment back down to 3.2%, which is more in line with the 2.6% average annual increase seen over the past two decades.

In 2023, an average of nearly 67 million Americans per month collected Social Security benefits, totaling over $1.4 trillion dollars in benefits paid during the year, according to the SSA.

Social Security benefits represent about 30% of income for Americans aged 65 and older, the administration said.

© 2024 Staten Island Advance
Distributed by Tribune Content Agency, LLC

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