Next Social Security increase could be smaller than 2025’s
| Social Security recipients can expect 2.3 percent more in their pockets next year, according to The Senior Citizens League’s latest annual prediction of benefit increases. Other analysts have predicted an increase of 2.2 percent, slightly lower than TSCL’s. All of the projections, which are subject to change, are lower than the 2.5 percent increase in benefits for 2025. Official announcements of benefit increases traditionally are made in December by the Social Security Administration. Any upcoming increase would take effect next January. Over the past decade, the COLA (cost of living adjustment) has averaged about 2.6 percent. For 2024, the increase was 3.2 percent. In recent years, the high-water mark for increases was in 2023, at 8.7 percent. The year before that, the increase was 5.9 percent. From 2017 to 2021, the amounts ranged from less than 1 percent to 2.8 percent. The Senior Citizens League (TSCL) is a national, non-profit organization providing advocacy and information on issues affecting older adults. Its predictions of the next COLAs for Social Security are based on the Consumer Price Index, the Federal Reserve interest rate, and the national unemployment rate. The predictions are updated and adjusted throughout any given year in response to economic conditions, said Alex Moore, TSCL’s statistician. For instance, the initial forecast of 2.3 percent has since been raised slightly to 2.4 percent. |
| Meanwhile, legislation has been introduced in Congress that would eliminate income taxes on Social Security benefits. TSCL estimates that move would save the typical senior household about $3,000 annually and would reduce “double taxation” on seniors who already paid a payroll tax as contributions to their benefits. If the legislation doesn’t pass into law, the tax thresholds that haven’t been adjusted for inflation since 1984 will result in more low-income seniors paying taxes as annual COLAs accumulate. TSCL’s executive director, Shannon Benton, said eliminating income tax on Social Security would help seniors who are “struggling with a cost of living that is growing much faster than their incomes. However, we need to do even more for low-income seniors whose dignity depends on Social Security payments that have already lost 20 percent of their buying power over the last 15 years. Many lower-income seniors already do n’t make enough to pay taxes on their benefits, and the only way to help them is by reforming Social Security’s COLAs.” |
