Persistent inflation will drive up seniors’ Social Security checks next year, with the government announcing a 3.6% cost-of-living increase.
That works out to an extra $75 a month for the average retirement benefit.
The program covers 72 million people, including both the retirement fund and the Supplemental Security Income fund.
People were interested in these podcasts
“Social Security will implement this cost-of-living adjustment for 76 million Americans, giving them greater financial stability,” said Frank J. Bisignano, Social Security’s commissioner.
By law, the increase is tied to inflation — specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The Bureau of Labor Statistics said Wednesday the Consumer Price Index rose 3.7% for the year ending in September, up from the 3.4% annual reading in August.
Last year’s increase was 2.8%. The rise this year reflects ongoing inflation.
The increase is the highest since an 8.7% rise in 2022, when inflation was surging under President Biden.
The inflation increase will also apply to the payroll tax, where income up to $192,300 is now subject to the tax.
For most workers, the 12.4% tax is split between them and their employer, though self-employed individuals pay the full amount.
Rep. John Larson, Connecticut Democrat, said the increase is a black mark for President Trump, who’d promised to tame inflation.
“As Americans struggle to make ends meet, a small bump in benefits is always welcome news — but for many seniors living on fixed incomes, it won’t be enough to keep pace with rising costs,” he said.
He renewed his push for Congress to raise the cap on taxable earnings, saying that sweating more money from the wealthy would help Social Security’s looming financial troubles.
Allowing full taxation on incomes at $400,000 or more, he said, would mean enough money for even bigger cost-of-living adjustments.
As it stands now, Social Security’s trust funds are slated to exhaust their money — at this point little more than IOUs anyway — early in the next decade.
Unless Congress changes the law, benefits would be immediately cut to the point that they can be covered by income from payroll taxes.
That would likely mean a 22% cut in benefits.
“Americans are depending on their Congress to enhance benefits — not cut them — and Democrats are ready to act,” Mr. Larson said. “Our plan will stop these automatic cuts, boost benefits across the board, and ensure no one can retire into poverty after a lifetime of work, all by finally making the ultra-wealthy pay their fair share.”
Contact the author
Please read our comment policy before commenting.