Latest news with #SeniorCitizensLeague
Globe and Mail
4 days ago
- Business
- Globe and Mail
Will 2026's Social Security COLA Be Larger Than 2025's? Here's What We Know So Far.
Key Points Seniors on Social Security are hoping for a generous cost-of-living adjustment (COLA) in 2026. Initial estimates are encouraging but incomplete. It's important not to rely too heavily on Social Security COLAs either way. The $23,760 Social Security bonus most retirees completely overlook › When the Social Security Administration announced last October that benefits would be increasing by 2.5%, many older Americans were unhappy, and understandably so. That 2.5% cost-of-living adjustment (COLA) was the smallest in years. And coming off that stingy raise, many seniors are no doubt hoping for a much more generous COLA in 2026. But will they get one? That's the big question. Here's what we know so far. Things look promising -- to a point The Senior Citizens League, an advocacy group, makes predictions on Social Security COLAs throughout the year to try to give beneficiaries a sense of what to expect in the new year. Those projections aren't just random -- they're based on the most recent inflation data available. In June, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.6% on an annual basis. It's the CPI-W that's used to calculate Social Security COLAs each year. Following the release of that information, The Senior Citizens League upped its 2026 Social Security COLA projection from its previous 2.5% estimate to 2.6%. It's worth noting that the group's COLA projection for 2026 has been steadily increasing month to month in line with changes in inflation. That said, that 2.6% COLA projection is just that -- a projection. No one can predict with certainty what next year's Social Security COLA will amount to at this stage because that number is based on third-quarter changes to the CPI-W. It's for this reason that Social Security COLAs are typically announced in October. Don't bank on a large 2026 Social Security COLA either way If you're someone who gets a monthly paycheck from Social Security, you may be hoping for a more robust COLA in 2026 than you got this year. You may even be in a place where a 2.6% raise versus a 2.5% raise makes a difference. But rather than hold out hope for a generous Social Security COLA in 2026, a better bet may be to reassess your financial situation and see whether there are things you can do to improve it on your own. The reality is that while inflation has been ticking upward these past few months, we don't know whether this trend will continue. And even if next year's Social Security COLA is larger than 2025's, it doesn't guarantee that you'll end up with more buying power. Remember, a larger Social Security COLA only means that inflation is picking up. So, what you gain in the form of a more generous COLA, you lose in the form of price increases. In light of that, now's the time to assess your spending to determine whether there's room to cut expenses. That could mean downsizing or relocating to an area that's less expensive overall. You may also want to consider securing some income outside of Social Security, whether by joining the gig economy or seeking out a part-time job. If you're in a place where you truly need a big boost to your monthly Social Security checks, it means you probably need more than just a COLA to see your financial situation change for the better. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.
Yahoo
06-07-2025
- Business
- Yahoo
Social Security's 2026 COLA Is Shaping Up to Be a No-Win Scenario for Retirees
With inflation rising, retirees are paying higher prices now but won't receive a benefit increase until later. The key inflation metric used to calculate the Social Security COLA doesn't fully reflect retirees' higher costs. Less accurate data collection this year could increase the odds that the 2026 COLA doesn't keep up with inflation. The $23,760 Social Security bonus most retirees completely overlook › What if your Social Security retirement benefits never increased? The buying power of those benefits would steadily erode over time due to inflation. Many retirees would soon find themselves in dire straits. The good news is that your Social Security benefits usually increase each year to help keep up with inflation. Since 1975, a cost-of-living adjustment (COLA) has been calculated annually and applied to all Social Security benefits. But there's bad news, too. Social Security's 2026 COLA is shaping up to be a no-win scenario for retirees. To be sure, we don't know yet what the 2026 Social Security COLA will be. The amount of the benefit increase won't be announced until mid-October. The Social Security Administration must wait for the September inflation data from the U.S. Bureau of Labor Statistics (BLS) before finalizing its calculation of next year's COLA. However, that doesn't mean we can't have a reasonable idea about what the 2026 Social Security COLA might be as things stand now. Each month, The Senior Citizens League (TSCL), a nonprofit organization dedicated to advocating for seniors, crunches the numbers to project the next COLA. There has been a clear trend in TSCL's Social Security COLA predictions. For four consecutive months, the projected increase has continued to rise. The organization's latest projected COLA, announced on June 11, 2025, is 2.5%, up from 2.4% the previous month. This trend is due mainly to slowly rising inflation. And it could keep moving higher. Many economists expect accelerating inflation in the second half of 2025 as the full brunt of the Trump administration's tariffs is felt. The Social Security COLA is intended to protect benefits from being eroded by inflation. Why would retirees face a no-win scenario if inflation keeps rising? For one thing, the timing works against them. They must pay higher prices now but won't receive a benefits increase until later. The 2026 COLA won't hit Social Security payments until January. There's also another issue. The Social Security COLA is calculated using an inflation metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This metric attempts to measure the price increases experienced by blue-collar workers who live in areas with large populations. But the CPI-W is a much maligned metric. The Libertarian-leaning Cato Institute has called the CPI-W an "outdated measure" that is "riddled with measurement errors." TSCL has pointed out that the CPI-W assumes workers spend around 7% of their income on healthcare, but seniors can spend 16% or more of their income on healthcare. The primary issue is that the CPI-W focuses on working Americans rather than retirees. In a 2024 study, TSCL found that the disconnect has caused Social Security recipients to lose roughly 20% of their buying power since 2010. Several organizations, including TSCL, believe that an alternative metric, the Consumer Price Index for the Elderly (CPI-E), would better reflect the impact of inflation on older Americans. However, the CPI-W will be used for the 2026 Social Security COLA calculation -- and it could perpetuate the cycle of retirees receiving a smaller benefit increase than they probably should get. To make matters worse, the data used to calculate the CPI-W this year could be significantly less reliable than it's been in the past. Why? According to The Wall Street Journal, a hiring freeze at the BLS has forced the agency to use a less accurate method to estimate prices because it doesn't have enough workers to collect the same amount of information as in previous years. If the CPI-W is based on suspect data, the 2026 Social Security COLA will be suspect. TSCL executive director Shannon Benton said in a press release, "Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that's lower than actual inflation." She added that this could "cost seniors thousands of dollars over the course of their retirement." Things could be worse, of course. Any COLA is better than no COLA at all. However, retirees face the prospects of paying higher prices before they receive extra money, a key inflation metric that doesn't fully reflect the prices they pay, and potentially inaccurate inflation data that could skew the COLA amount. Social Security's 2026 COLA really is shaping up to be a no-win scenario for retirees. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Social Security's 2026 COLA Is Shaping Up to Be a No-Win Scenario for Retirees was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
04-07-2025
- Business
- Yahoo
Almost 22 Million Seniors Live on Social Security Alone. Here's Why That's a Problem.
People who don't manage to save for retirement often have just Social Security as income. Since those benefits will only replace a modest portion of your income, you may end up cash-strapped without savings. The fact that potential benefit cuts are looming makes matters even worse. The $23,760 Social Security bonus most retirees completely overlook › If you're someone who reads personal finance websites, you're probably familiar with the "save for retirement" mantra. And you may even be a little tired of it. But there's a reason why personal finance writers make a point to encourage people to save for retirement rather than rely on Social Security alone. If you don't have income outside those benefits, your senior years could end up being extremely stressful. The Senior Citizens League, a nonpartisan advocacy group, recently estimated that 21.8 million seniors today get by on Social Security benefits without outside income to fall back on. And not surprisingly, almost two-thirds of seniors say they're not happy with the amount of money they receive from their monthly Social Security checks. If your plan for retirement is to live mostly or fully on Social Security, it's important that you rethink it. If you don't set yourself up with additional income, you could be in for a very dissatisfying retirement. One of the biggest misconceptions about Social Security is that it's designed to replace your paycheck in full. If you're an average earner, Social Security will take the place of about 40% of your preretirement wages. This means that if you're used to living on $60,000 a year, Social Security might pay you around $24,000. Now, it's true that a lot of people see their expenses shrink in retirement. You may not have a mortgage anymore, and you might shed some costs by not having to commute to a job. You may even be able to get rid of a car, depending on your situation. But unless you're truly confident that you can manage a 60% pay cut in retirement, you should make an effort to fund an IRA or 401(k) plan so you're not forced to live on just Social Security later in life. Doing so could mean struggling to cover even basic expenses -- forget about extras like travel and leisure. Not only might you face a massive pay cut in retirement if you end up having to live on Social Security alone, but you can't gloss over the fact that benefit cuts are a strong possibility. In the coming years, Social Security isn't expected to generate enough revenue to keep up with scheduled benefits, which means cuts will be on the table once the program's trust funds run out of money. The most recent report by Social Security's Trustees found that benefit cuts could be on the table in less than a decade. And those cuts could be substantial, coming in at more than 20%. Remember that 60% pay cut we just talked about? It could end up being even larger if lawmakers don't find a way to prevent a broad reduction in Social Security benefits. That's all the more reason to save. While it's not so surprising to learn that almost 22 million seniors today live on only Social Security, that's far from an ideal situation. If you're still working, you have a solid opportunity to avoid landing in a similar boat for your senior years. One thing you should realize is that if you give your retirement savings a long time to grow, you can turn a series of relatively small IRA or 401(k) contributions into a lot of money. In fact, let's say you're only able to save $100 a month for retirement, but you do so from ages 25 until 65. If your portfolio gives you an 8% yearly return, which is a bit below the stock market's average, that could leave you with a nest egg worth almost $311,000. Then, if you use the 4% rule to dictate how much money you withdraw from your savings in retirement each year, it gives you about $12,400 in annual income from your IRA or 401(k). That's more than an extra $1,000 each month on top of what Social Security pays you. Of course, depending on your situation, finding even $100 a month for retirement savings may be tricky. And that's understandable. But if you're able to carve out some money for long-term savings, you could set yourself up to be a lot less dependent on Social Security down the line. That could make your retirement much easier and far less stressful. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Almost 22 Million Seniors Live on Social Security Alone. Here's Why That's a Problem. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-07-2025
- Business
- Yahoo
Millions of seniors will see smaller Social Security checks starting this month
Time's up for roughly 2 million Americans on the cusp of having their Social Security payments slashed in half. And it has nothing to do with the looming shortfall in Social Security's reserves. That's still eight years down the road. The reduced benefit payments starting this month are how the Social Security Administration (SSA) is attempting to recoup money it overpaid to some Americans. Social Security will withhold 50% of a beneficiary's monthly check until the sum of their overpayments is reclaimed. The SSA issues nearly $1.4 trillion a year to some 73 million Social Security and SSI recipients. An overpayment can occur when a beneficiary doesn't update a change in income, for example, or when the SSA incorrectly calculates a person's benefits. The agency is required by law to try to claw back or reclaim money when overpayments occur. 'Overpayments should be recouped, but we remain concerned about the impact of any recovery rate on the less financially stable retirees,' Shannon Benton, executive director of the Senior Citizens League, told Yahoo Finance. During the Biden administration, the default withholding rate was dropped to 10% of a beneficiary's monthly benefit from 100%, dramatically reducing financial hardship on those with overpayments. In March, however, the Trump administration announced that the agency would again withhold 100% of an individual's Social Security check until all overpaid funds were paid back. After pushback from advocates and seniors, in April, the rate was reduced to 50%, and the agency said it would begin retrieving around $72 billion in incorrect payments made between 2015 and 2022, starting in July. It's still a serious problem for many seniors. 'For some retirees, it won't matter if it's 1% or 100%,' Benton said. 'Any amount of clawback could be catastrophic.' Improper payments accounted for less than 1% of the total benefits paid during that period, but at the end of fiscal year 2023, SSA had an uncollected overpayment balance of $23 billion, according to an August 2024 inspector general's report. Read more: When will I get my Social Security check? Payment schedule for 2025. The withholding is expected to begin with Social Security payments made around July 24. The withholding rate for Supplemental Security Income benefits remains 10%. Those who fall under this clawback should have received notification. Recipients who received a notice have 90 days to subscribing, you are agreeing to Yahoo's Terms and Privacy Policy If you've received overpayments or are facing withholding, you have several options: You can repay the overpayment online by credit card, online bill pay, or check. To request smaller monthly repayments, you can fill out a Request for Change in Overpayment Recovery Rate (Form SSA-634) and fax or mail the form to your local Social Security office. If you can't afford to pay back at all, and if you feel the error wasn't your fault or is unfair for some other reason, you can request to waive repayment. If you don't agree that you've been overpaid, or you believe the overpayment amount is incorrect, you can request a reconsideration. If you have ongoing problems, contact the Constituent Services staffer of your congressional representative. Regardless of party, all members have staffers who help resolve problems with Social Security benefits. Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter Sign in to access your portfolio
Yahoo
02-07-2025
- Business
- Yahoo
Millions of seniors will see smaller Social Security checks starting this month
Time's up for roughly 2 million Americans on the cusp of having their Social Security payments slashed in half. And it has nothing to do with the looming shortfall in Social Security's reserves. That's still eight years down the road. The reduced benefit payments starting this month are how the Social Security Administration (SSA) is attempting to recoup money it overpaid to some Americans. Social Security will withhold 50% of a beneficiary's monthly check until the sum of their overpayments is reclaimed. The SSA issues nearly $1.4 trillion a year to some 73 million Social Security and SSI recipients. An overpayment can occur when a beneficiary doesn't update a change in income, for example, or when the SSA incorrectly calculates a person's benefits. The agency is required by law to try to claw back or reclaim money when overpayments occur. 'Overpayments should be recouped, but we remain concerned about the impact of any recovery rate on the less financially stable retirees,' Shannon Benton, executive director of the Senior Citizens League, told Yahoo Finance. During the Biden administration, the default withholding rate was dropped to 10% of a beneficiary's monthly benefit from 100%, dramatically reducing financial hardship on those with overpayments. In March, however, the Trump administration announced that the agency would again withhold 100% of an individual's Social Security check until all overpaid funds were paid back. After pushback from advocates and seniors, in April, the rate was reduced to 50%, and the agency said it would begin retrieving around $72 billion in incorrect payments made between 2015 and 2022, starting in July. It's still a serious problem for many seniors. 'For some retirees, it won't matter if it's 1% or 100%,' Benton said. 'Any amount of clawback could be catastrophic.' Improper payments accounted for less than 1% of the total benefits paid during that period, but at the end of fiscal year 2023, SSA had an uncollected overpayment balance of $23 billion, according to an August 2024 inspector general's report. Read more: When will I get my Social Security check? Payment schedule for 2025. The withholding is expected to begin with Social Security payments made around July 24. The withholding rate for Supplemental Security Income benefits remains 10%. Those who fall under this clawback should have received notification. Recipients who received a notice have 90 days to subscribing, you are agreeing to Yahoo's Terms and Privacy Policy If you've received overpayments or are facing withholding, you have several options: You can repay the overpayment online by credit card, online bill pay, or check. To request smaller monthly repayments, you can fill out a Request for Change in Overpayment Recovery Rate (Form SSA-634) and fax or mail the form to your local Social Security office. If you can't afford to pay back at all, and if you feel the error wasn't your fault or is unfair for some other reason, you can request to waive repayment. If you don't agree that you've been overpaid, or you believe the overpayment amount is incorrect, you can request a reconsideration. If you have ongoing problems, contact the Constituent Services staffer of your congressional representative. Regardless of party, all members have staffers who help resolve problems with Social Security benefits. Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
