Social Security recipients should see greater Cost of Living Adjustment (COLA) next year amid rising inflation, according to new reports.
An analysis from the Senior Citizens League (TSCL) predicts that the 2027 COLA will be 3.9%, which would represent an increase of 1.1 percentage points from this year’s COLA of 2.8%. TSCL’s previous forecast for 2027 COLA was 2.8% in its February and March estimates.
TSCL estimates that the average Social security the benefit check for retired workers would increase by $81.17, from $2,081.16 to $2,162.33.
“Many seniors tell us the same thing: As inflation picks up, life still doesn’t seem affordable. The average senior already lives on far less than younger Americans, according to the Census Bureau, and our supporters constantly tell us they feel like they’re falling further and further behind,” said Shannon Benton, executive director of TSCL.
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An analysis from the Senior Citizens League (TSCL) predicts the 2027 COLA will be 3.9%. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
The report notes that pressure from rising oil prices could push inflation even higher, as energy prices impact the situation. household budgets directly and through higher transport costs for other goods.
The nonpartisan Committee for a Responsible Federal Budget (CRFB) has estimated that the 2027 COLA will be 3.8% based on latest inflation data – slightly lower than the TSCL estimate.
The CRFB notes that according to inflation Over the next five months, the COLA will likely be between 3% and 4.5%.
MAIN SOCIAL SECURITY TRUST FUND AT RISK OF EXHAUSTION IN 2032, TRIGGERING AUTOMATIC BENEFIT REDUCTIONS
The main Social Security trust fund is expected to become insolvent in 2032. (Demetrius Freeman/The Washington Post via Getty Images)
He also warns that if wages do not rise in response to continued rising inflation, this will expand the scope of Social Security. budget deficit and accelerate the insolvency of a key trust fund.
“If the recent rise in inflation caused the COLA to rise to 3.8 percent without raising wages, we estimate that it would widen the Social Security deficit by approximately $300 billion over the next decade and advance the insolvency of the Old Age Trust Fund by three months between the end of 2032 and the beginning of the year,” CRFB noted.
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The SSA will be required to reduce Social Security benefits if the program’s trust fund is depleted. (Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images)
Once the trust fund is depleted, the Social Security Administration will be required by law to reduce benefits to match payroll tax revenues, which CRFB says will result in a 25 percent reduction for beneficiaries and “erase nearly a decade of COLA increases.”
The CRFB has proposed a number of proposals to improve the solvency of Social Security, including a cap on COLAs for those with the largest benefits and highest lifetime earnings, which would be capped to match benefits paid to middle and high earners.
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The group also proposed a six-figure limit, which would cap total benefits for wealthy couples at $100,000 or for individuals at $50,000; as well as a employers’ compensation tax This would apply a flat tax rate to all employer compensation costs – including salaries and employee benefits like health insurance and stock options.