Current:Home > ScamsSocial Security’s scheduled cost of living increase ‘won’t make a dent’ for some retirees -Prime Money Path
Social Security’s scheduled cost of living increase ‘won’t make a dent’ for some retirees
View
Date:2025-04-14 14:06:09
WASHINGTON (AP) — Sherri Myers, an 82-year-old resident of Pensacola City, Florida, says the Social Security cost-of-living increase she’ll receive in January “won’t make a dent” in helping her meet her day-to-day expenses.
“Inflation has eaten up my savings,” she said. “I don’t have anything to fall back on — the cushion is gone.” So even with the anticipated increase she’s looking for work to supplement her retirement income, which consists of a small pension and her Social Security benefits.
About 70.6 million Social Security recipients are expected to receive a smaller cost of living increase for 2025 than in recent years, as inflation has moderated. The Social Security Administration makes the official COLA announcement Thursday, and analysts predicted in advance it would be 2.5% for 2025. Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.
“I think a lot of seniors are going to say that this is not really enough to keep up with prices,” said AARP Senior Vice President of Government Affairs Bill Sweeney.
The silver lining is that it’s an indication that inflation is moderating, he said.
The announcement comes as the national social insurance plan faces a severe financial shortfall in the coming years.
The annual Social Security and Medicare trustees report released in May said the program’s trust fund will be unable to pay full benefits beginning in 2035. If the trust fund is depleted, the government will be able to pay only 83% of scheduled benefits, the report said.
The program is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023. Analysts estimate that the maximum amount will go up to $174,900 in 2025.
On the presidential campaign trail, Vice President Kamala Harris and former President Donald Trump have presented dueling plans on how they would strengthen Social Security.
Harris says on her campaign website that she will protect Social Security by “making millionaires and billionaires pay their fair share in taxes.”
Trump promises that he would not cut the social program or make changes to the retirement age. Trump also pledges tax cuts for older Americans, posting on Truth Social in July that “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!”
AARP conducted interviews with both Harris and Trump in late August, and asked how the candidates would protect the Social Security Trust Fund.
Harris said she would make up for the shortfall by “making billionaires and big corporations pay their fair share in taxes and use that money to protect and strengthen Social Security for the long haul.”
Trump said “we’ll protect it with growth. I don’t want to do anything having to do with increasing age. I won’t do that. As you know, I was there for four years and never even thought about doing it. I’m going to do nothing to Social Security.”
Lawmakers have proposed a variety of solutions to deal with the funding shortfall.
The Republican Study Committee’s Fiscal Year 2025 plan has proposed cutting Social Security costs by raising the retirement age and reducing the annual COLA. Trump has not endorsed the plan.
Linda Benesch, a spokeswoman for Social Security Works, an advocacy group for the social insurance program, said “we are concerned about this Republican Study Committee budget, and the provisions in it that would cut benefits for retirees.”
Social Security Works endorsed Harris for president in July, in part for her decision as a California senator, to co-sponsor a bill that called on the Social Security Administration to use a different index to calculate cost of living increase: the CPI-E, which measures price changes based on the spending patterns of the elderly, like health care, food and medicine costs.
The COLA is currently calculated according to the Bureau of Labor Statistics’ Consumer Price Index, or CPI.
veryGood! (335)
Related
- Hackers hit Rhode Island benefits system in major cyberattack. Personal data could be released soon
- House panel opening investigation into Harvard, MIT and UPenn after antisemitism hearing
- Shots fired outside Jewish temple in upstate New York as Hanukkah begins, shooter’s motive unknown
- 'The Archies' movie: Cast, trailer, how to watch new take on iconic comic books
- Moving abroad can be expensive: These 5 countries will 'pay' you to move there
- Four women got carbon monoxide poisoning — from a hookah. Now, they're warning others.
- 6 Republicans who falsely certified that Trump won Nevada in 2020 indicted
- Construction of a cable to connect the power grids of Greece and Cyprus is set to start next year
- Stamford Road collision sends motorcyclist flying; driver arrested
- Live updates | Palestinians live in dire human conditions in Gaza despite Israel’s safe zone
Ranking
- North Carolina trustees approve Bill Belichick’s deal ahead of introductory news conference
- Adele delivers raunchy, inspiring speech at THR gala: 'The boss at home, the boss at work'
- Deputy U.S. Marshal charged with entering plane drunk after misconduct report on flight to London
- Biden heads to Las Vegas to showcase $8.2B for 10 major rail projects around the country
- Senate begins final push to expand Social Security benefits for millions of people
- Mexico City rattled by moderate 5.8 magnitude earthquake
- Judge allows emergency abortion in Texas in first case of its kind since before Roe v. Wade
- UNLV gunman was a professor who applied to work at the university, reports say: Live updates
Recommendation
Toyota to invest $922 million to build a new paint facility at its Kentucky complex
Army secretary fires top prosecutor over 2013 email questioning sexual assault claims
Investment banks to put $10 billion into projects aimed at interconnecting South America
A Jan. 6 rioter praised Vivek Ramaswamy at his sentencing for suggesting riot was an ‘inside job’
Warm inflation data keep S&P 500, Dow, Nasdaq under wraps before Fed meeting next week
Free toy store in Nashville gives families the dignity of choice while shopping for holiday gifts
LeBron James, Bucks among favorites as NBA's wildly successful In-Season tourney concludes
Early retirement was a symptom of the pandemic. Why many aren't going back to work