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Seniors may be in line for a raise.
The average Social Security check currently sits at roughly $2,071, according to the Social Security Administration. But that could soon change as experts estimate the next Cost of Living Adjustment (COLA) will be a modest 3.8%.
The COLA is the yearly increase meant to help Social Security keep up with rising prices.
This means retirees may see their checks boosted to $2,149, a $78 increase. That’s if The Senior Citizens League (TSCL) — a non-partisan advocacy group that makes very accurate COLA projections — is correct.
The TSCL just announced its forecast, which won’t be confirmed until October, that seniors may see a 3.8% boost, 1.0 percentage point higher than last year’s 2.8% increase. However, the numbers shift slightly as the TSCL calculates that the average benefits will rise by $73.62 — so checks would go from $1,937 to $2,011.
Regardless, the projected increase would offer seniors a much-needed boost as gas, groceries and energy prices remain high.
The COLA is always determined by the CPI-W’s percentage increase in the third quarter of the year from July, August and September. While the latest inflation report revealed cooling in June from May’s 4.2%, retirees may still need some extra cash.
But retirees could see an even bigger bump after Congress reintroduced the Social Security 2100 Act. First introduced back in 2017, the bill would make more changes to Social Security, including a higher minimum benefit and a new inflation measure for calculations.
If passed, the bill would raise benefits by 2%, set the new minimum benefit to 125% of the Federal poverty line, and switch the COLA calculation to the CPI for the Elderly (CPI-E).
Let’s break it down: the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) vs the CPI-E (Consumer Price Index for the Elderly).
The CPI-W currently calculates Social Security COLAs. It tracks the spending of working-age people — specifically wage and clerical workers. But it also tracks the cost of food, housing, energy, transportation and healthcare.
Meanwhile, the CPI-E is another measure for folks 62 and older, offering more information on expenses that directly impact seniors. Some advocates believe that this change would be more beneficial to Social Security recipients as it’s a “senior-focused” inflation measure instead of “working-person-focused.”
Additionally, the bill would increase the Social Security payroll tax and expand it to cover income over $400,000, securing its trust fund for an additional 32 years. A problem plaguing lawmakers as Social Security funds are projected to run out in late 2032.
Many experts, including the TSCL, fear the chance of the bill passing is slim to none.
“Although the Social Security 2100 Act is unlikely to pass in the current Congress, it should. The bill is the gold standard for Social Security reform and accomplishes the majority of changes older Americans want to see for the program,” TSCL Executive Director Shannon Benton said.
“The reality is that poverty is increasing rapidly among American seniors, who make up the fastest-growing portion of the homeless population. Adjusting the minimum benefit to above the Federal poverty line would almost certainly slow this trend, although more holistic efforts may be required to stop it entirely,” Benton added.
