In less than two weeks the COLA check increase will be announced. How much more can you expect?
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One of the constants for many retired Americans is the reliance on Social Security to help maintain a comfortable lifestyle. It's a system that's been the bedrock of retirement for countless individuals, and with the cost of living on the rise, the upcoming adjustments to Social Security checks are more crucial than ever.
In the coming weeks, Social Security recipients are set to receive some potentially good news. The Social Security Administration (SSA) is due to announce the new cost-of-living adjustment (COLA) check increase. This adjustment is a lifeline for many, as it helps to ensure that the benefits keep pace with inflation and the rising cost of living.
Understanding the Importance of COLA
COLA is not just a soft drink; it's an essential annual adjustment that affects the lives of millions. For the 50 million retired workers among the 68 million Americans who receive benefits from the SSA, this adjustment is a significant event.
These retirees collectively receive nearly $1.5 trillion annually, and for about 13% of them, Social Security benefits are almost their entire source of income. For more than 40% of them, these benefits account for at least half of their income, making the COLA increase not just a matter of additional comfort but of necessity.
The History and Calculation of COLA
The concept of COLA dates back to 1975 when it was introduced to ensure that Social Security benefits would automatically adjust to reflect the cost of living. Before this, any changes to benefits required congressional approval, leading to long periods without adjustments and political wrangling.
Today, the COLA is linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by the U.S. Bureau of Labor Statistics (BLS) every month. This index attempts to track inflation across the economy and distill it into a single figure.
However, the CPI-W is not without its critics. Some argue that it doesn't accurately capture the increased expenses that seniors face, particularly in areas like medical care, which often experiences higher-than-average inflation rates. This has led to concerns that despite annual COLA increases, seniors' purchasing power may be declining.
The Impact of Inflation and the Pandemic
Unfortunately, the coronavirus pandemic exacerbated inflation, affecting a large number of Americans. In 2021 and 2022, Social Security adjustments showed COLA increases of 5.9% and 8.7%, respectively—some of the largest since the early 1980s. While these increases may seem substantial, they may not fully compensate for the increased cost of living, especially as the CPI-W may not reflect the spending patterns of retirees.
According to The Senior Citizens League (TSCL), since 2010, seniors’ purchasing power from Social Security benefits has decreased by 20%. This is a sobering statistic that underscores the importance of the upcoming COLA announcement.
Looking Ahead to the 2025 Adjustment
The official COLA figure for 2025 won't be known until October and once it is announced, we will be sure to let you all know! But what we do know now, is it's calculated based on CPI-W data from July, August, and September. With two of those figures already released, projections can be made.
TSCL's latest estimate is a 2.5% increase, which is lower than the previous year's 3.2%. While this is just an estimate, the official figure will be released soon enough, providing a clearer picture of what retirees can expect.
What Does This Mean for You?
For our members here at The GrayVine, the COLA increase is more than just a number—it's about maintaining your quality of life in the face of ever-increasing expenses. While any increase is welcome, it's essential to plan and budget accordingly, considering that the increase may not fully cover the rising costs.
As we await the official announcement, we invite you to share your thoughts and experiences with us in the comments below! How has the cost-of-living adjustment affected your life in the past? What are your hopes for the upcoming increase? Your insights are valuable, and we have no doubt your stories will resonate with other members in our community facing similar challenges.
Here at The GrayVine we will do our best to keep you updated with the latest information and provide tips on how to make the most of your Social Security benefits!
In the coming weeks, Social Security recipients are set to receive some potentially good news. The Social Security Administration (SSA) is due to announce the new cost-of-living adjustment (COLA) check increase. This adjustment is a lifeline for many, as it helps to ensure that the benefits keep pace with inflation and the rising cost of living.
Understanding the Importance of COLA
COLA is not just a soft drink; it's an essential annual adjustment that affects the lives of millions. For the 50 million retired workers among the 68 million Americans who receive benefits from the SSA, this adjustment is a significant event.
These retirees collectively receive nearly $1.5 trillion annually, and for about 13% of them, Social Security benefits are almost their entire source of income. For more than 40% of them, these benefits account for at least half of their income, making the COLA increase not just a matter of additional comfort but of necessity.
We cannot underestimate the importance of the COLA check increase! Image source: Shutterstock.
The History and Calculation of COLA
The concept of COLA dates back to 1975 when it was introduced to ensure that Social Security benefits would automatically adjust to reflect the cost of living. Before this, any changes to benefits required congressional approval, leading to long periods without adjustments and political wrangling.
Today, the COLA is linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by the U.S. Bureau of Labor Statistics (BLS) every month. This index attempts to track inflation across the economy and distill it into a single figure.
However, the CPI-W is not without its critics. Some argue that it doesn't accurately capture the increased expenses that seniors face, particularly in areas like medical care, which often experiences higher-than-average inflation rates. This has led to concerns that despite annual COLA increases, seniors' purchasing power may be declining.
The Impact of Inflation and the Pandemic
Unfortunately, the coronavirus pandemic exacerbated inflation, affecting a large number of Americans. In 2021 and 2022, Social Security adjustments showed COLA increases of 5.9% and 8.7%, respectively—some of the largest since the early 1980s. While these increases may seem substantial, they may not fully compensate for the increased cost of living, especially as the CPI-W may not reflect the spending patterns of retirees.
According to The Senior Citizens League (TSCL), since 2010, seniors’ purchasing power from Social Security benefits has decreased by 20%. This is a sobering statistic that underscores the importance of the upcoming COLA announcement.
Looking Ahead to the 2025 Adjustment
The official COLA figure for 2025 won't be known until October and once it is announced, we will be sure to let you all know! But what we do know now, is it's calculated based on CPI-W data from July, August, and September. With two of those figures already released, projections can be made.
TSCL's latest estimate is a 2.5% increase, which is lower than the previous year's 3.2%. While this is just an estimate, the official figure will be released soon enough, providing a clearer picture of what retirees can expect.
What Does This Mean for You?
For our members here at The GrayVine, the COLA increase is more than just a number—it's about maintaining your quality of life in the face of ever-increasing expenses. While any increase is welcome, it's essential to plan and budget accordingly, considering that the increase may not fully cover the rising costs.
As we await the official announcement, we invite you to share your thoughts and experiences with us in the comments below! How has the cost-of-living adjustment affected your life in the past? What are your hopes for the upcoming increase? Your insights are valuable, and we have no doubt your stories will resonate with other members in our community facing similar challenges.
Here at The GrayVine we will do our best to keep you updated with the latest information and provide tips on how to make the most of your Social Security benefits!
