Seniors on Social Security will see about $75 more a month in their benefit checks starting in January to offset rising inflation, the agency said Wednesday.
The bump in benefits reflects a 3.6 percent cost-of-living adjustment (COLA) increase, the biggest since 2023, when inflation ran historically hot in the aftermath of the pandemic.
However, retirees may not see any real gain in their monthly budgets as the COLA increase lags slightly behind the recent pace of inflation.
The Bureau of Labor Statistics said Wednesday that prices rose 3.7 percent in September year-over-year — the highest annual inflation since May.
Before Wednesday’s announcement, AARP, the interest group for seniors, had said that a 3.5 percent increase would not be sufficient to keep pace with inflation.
With the new adjustment, the average Social Security check will be about $2,170 a month, the agency said.
The increased benefits come as Americans have been dealing with higher inflation throughout the economy, as the war in Iran continues to push up costs. Most recently, record diesel prices resulting in large part from the war have worked their way through the supply chain, elevating the cost of transporting groceries and other items.
Higher prices are playing a big role in the midterm elections, as voters lose confidence in the Trump administration’s handling of the economy. About 25 percent of registered voters said they approved of President Donald Trump’s handling of the economy, according to a Financial Times/Focaldata poll out this week.
Seventy-five million Americans receiving Social Security benefits, including retirees, those with disabilities and those who receive Supplemental Security Income payments, will see the increases in their benefits.
The long-term outlook for the program, however, is troubled. Social Security comes from payroll taxes on current workers, and for decades, the program, created during the Great Depression, collected more money than it paid out. That excess created a trust fund that gave Social Security a cushion as it paid out benefits.
But as the baby boomer generation retires, the program has been collecting less revenue than it pays out in benefits, eating into the trust fund. Now, that fund is scheduled to run out by 2032, which would lead to a cut in benefit payments.
Most experts think Congress won’t let that occur, but lawmakers have yet to coalesce around a plan to shore up the program. This term, members of Congress from both parties have floated some ideas, including raising the payroll tax cap for Social Security and increasing the amount that higher-income people would have to pay into the system.
“With the insolvency of Social Security’s retirement trust fund just six years away – and with it a deep 22% benefit cut – policymakers should urgently begin the work of enacting trust fund solutions,” the nonpartisan Committee for a Responsible Federal Budget wrote in a report Wednesday.
While the COLA increase is not seen as a major factor in driving the program toward insolvency, some experts have suggested that there should be some form of a cap placed on the adjustments.
The Trump administration has looked to address concerns about the cost of living. For seniors, the administration has announced plans to give a $90 check to most of those enrolled in Medicare Part B.
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