Social Security cost-of-living benefits increase announcement coming Thursday

[October 10, 2024]  By FATIMA HUSSEIN

WASHINGTON (AP) — More than 70 million Social Security recipients will learn Thursday how big a cost-of-living increase they'll get to their benefits next year.

In advance of the announcement, analysts predicted that the increase would be about 2.5% for 2025, smaller than increases the previous two years. Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.

The lower COLA for next year reflects the moderating inflation.

About 70.6 million people participate in the Social Security program, with an average benefit of about $1,920 a month. The AARP estimates that a 2.5% COLA would increase that by $48 a month.

In advance of the announcement, retirees voiced concern that the increase would not be enough to counter rising costs.

Sherri Myers, an 82-year-old Pensacola City, Florida, retiree, is now hoping to get an hourly job at Walmart to help make ends meet.

“I would like to eat good but I can’t. When I’m at the grocery store, I just walk past the vegetables because they are too expensive. I have to be very selective about what I eat — even McDonald’s is expensive,” she said.

With increased participation and fewer workers contributing, the Social Security program faces a severe financial shortfall in the coming years.

The annual Social Security and Medicare trustees report released in May said the program’s trust fund will be unable to pay full benefits beginning in 2035. If the trust fund is depleted, the government will be able to pay only 83% of scheduled benefits, the report said.

The program is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes was $168,600 for 2024, up from $160,200 in 2023. Analysts estimate that the maximum amount will go up to $174,900 in 2025.

 A Social Security card is displayed on Oct. 12, 2021, in Tigard, Ore. (AP Photo/Jenny Kane, File)

On the presidential campaign trail, Vice President Kamala Harris and former President Donald Trump have presented dueling plans on how they would strengthen Social Security.

Harris, the Democratic nominee, says on her campaign website that she will protect Social Security by “making millionaires and billionaires pay their fair share in taxes.”

Trump, the Republican nominee, promises that he would not cut the social program or make changes to the retirement age. Trump also pledges tax cuts for older Americans, posting on Truth Social in July that “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!”

AARP conducted interviews with both Harris and Trump in late August, and asked how the candidates would protect the Social Security Trust Fund.

Harris said she would make up for the shortfall by “making billionaires and big corporations pay their fair share in taxes and use that money to protect and strengthen Social Security for the long haul.”

Trump said, “We’ll protect it with growth. I don’t want to do anything having to do with increasing age. I won’t do that. As you know, I was there for four years and never even thought about doing it. I’m going to do nothing to Social Security.”

All contents © copyright 2024 Associated Press. All rights reserved