The PRICE of everyday goods seems to have been skyrocketing lately.
However, Social Security recipients will soon get a little bit of a breather.
Major changes are coming to the Social Security system (Stock)[/caption]
Each year, the Social Security Administration (SSA) increases benefits in an attempt to prevent inflation from eroding the purchasing power of beneficiaries.
This is known as the cost of living adjustment (COLA).
1. COLA BUMP
The Senior Citizens League (TSCL) predicts the COLA will be 2.6 percent, an increase from last month’s prediction of 2.5%.
That indicates the fifth consecutive month the forecast has increased amid inflationary pressures.
This change could impact more than 72.5 million Social Security recipients.
The COLA is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August and September.
That figure is compared to the CPI-W for the same period during the previous year. And the year-over-year difference is the new COLA.
It is usually announced in the beginning of October.
But some seniors could have more benefits to look forward to.
2. BONUS DEDUCTION
The One Big Beautiful Bill Act signed into law by President Donald Trump has opened the door for additional tax benefits.
For tax year 2025, seniors age 65 and older who file their taxes individually and earn less than $75,000 would get an additional $6,000 tax deduction.
Those married filing jointly who earn up to $150,000 would get a $12,000 deduction.
Tax payers with incomes that breach those thresholds would see reduced tax deductions until they are completely phased out.
Moreover, the SSA states that about 90 percent of recipients would no longer need to pay income taxes on their benefits thanks to the bill.
“By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned,” Social Security Commissioner Frank Bisignano said in a press release.
But TSCL argues these benefits don’t go far enough.
“The Big Beautiful Bill is a good start on providing financial relief for American seniors,” TSCL said in a statement.
“The next priority should be providing support for the estimated 7.3 million American seniors who are living on less than $1,000 per month, which is below the federal poverty line.”
According to TSCL’s analysis, about 13% of seniors live on less than $1,000 a month.
“TSCL’s research shows that 93% of American seniors see Social Security and Medicare reform as a high priority for Congress and the President,” TSCL said.
“They’re calling on the administration to calculate COLAs with an index more representative of seniors’ experiences and provide a one-time catchup payment to make up for historic COLA shortfalls,” TSCL continued.
But that’s not the only issue facing some beneficiaries.
3. GOING PAPERLESS
Beginning September 30, the SSA would no longer be mailing out paper checks to beneficiaries. It will exclusively make electronic payments.
Recipients will generally need to get payments via direct deposit or through a prepaid debit card called Direct Express.
However, a few beneficiaries will be able to sign up for waivers to continue receiving paper checks under certain circumstances.
The SSA says the change marks an effort to crack down on fraud and save money.
“Paper checks are 16 times more likely to be lost or stolen compared to electronic payments, increasing the risk of fraud,” The SSA said in a blog post.
“Electronic payments provide a safer, more secure way to receive benefits,” The SSA added.
WHEN SOCIAL SECURITY PAYMENTS ARE MADE
Social Security payments are issued on the second, third, or fourth Wednesday of each month based on the recipient’s birthdate:
- Second Wednesday: For individuals born between the 1st and 10th of the month
- Third Wednesday: For those born between the 11th and 20th
- Fourth Wednesday: For those born between the 21st and 31st
INSOLVENCY THREAT
The federal trust funds that finance Social Security benefits are at risk of insolvency in a little more than seven years, according to an analysis by the Committee for a Responsible Federal Budget (CRFB).
The CRFB estimates that without an act from Congress, millions of retirees could face an $18,100 cut to Social Security checks each year.
“If policymakers fail to act, they will effectively be supporting a 23% across-the-board benefit cut for all retirees in just eight years,” the CRFB said in its report.
“Fortunately, there is still time for policymakers to enact pro-growth solutions that protect the long-term viability of the program.”
