When Social Security turns 90, Congress faces a financial deadline
Social Security has a cash flow issue. For years, agents have paid more profits than they would take via payroll tax.
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New estimates based on the latest inflation report show that Social Security recipes could see monthly checks increase by 2.8% next year, but Medicare payments are still expected to take most of them.
The Social Security Administration will announce the actual 2026 Cost of Living Adjustments (COLA) in October, but analysts predict that COLA will use monthly consumer pricing data. In August, the overall annual inflation rate rose 2.9%, up from 2.7% in July, at its highest level since the beginning of the year, but in line with economists’ expectations. Core rates excluding the volatile food and energy sector increased by 3.1%, and forecasts were also consistent.
The higher the inflation rate in August, the COLA estimate rose from 2.7% to 2.8% from the previous month, but it is unlikely to provide more relief to older adults, says Mary Johnson, an independent social security and Medicare policy analyst.
“The estimated cola may reflect inflation rates, but not the true cost of aging in America,” said Ramsey Alwin, president and CEO of the National Council, a nonprofit focused on the issue of seniors. “Medicare Premium will eat the little extra money they receive.”
How long does Medicare take?
A 2.8% cola means an average social security benefit increase of more than $52 a month. The average monthly benefit was $1,864.87 in August, according to Social Security Management Data.
“That tends to look pretty overwhelming to most Social Security recipients,” Johnson said.
Earlier this year, Medicare trustees estimated that the standard monthly Part B premium would rise from $185.00 to $21.50 to $206.50. Medicare Part B Premium is usually announced later in the fall, but “the $21.50 jump is very close to bringing the record of the best premium jumps in the program history, which was set in 2022 at $21.60 per month,” Johnson said.
Plus, the premium for Part D prescription drug regimen may jump. Non-profit healthcare researcher KFF said the new demonstration program, which slowed the premium growth of the 2026 independent drug plan, would not be generous in 2026. Drug Plan premiums vary widely, but you will be allowed to increase your monthly premiums by as much as $50 a month from $35 a month in 2025.
Poverty among older people that may rise
The Census Bureau reported on August 9 that poverty among adults, ages 65, had risen in 2024 from the previous year. It was the only age group to see an increase. Based on the most comprehensive measure of poverty, the poverty rate rose from 14.2% to 15%, the highest level among all age groups.
“The census report revealed that. Low-income seniors are lagging behind,” said AARP Foundation President Claire Casey. “People over 65 are the only age group that raises poverty rates, and by 2024 nearly a million elderly people were in poverty.
“A few extra dollars (from Coke) won’t start to give them real financial security,” Alwyn said.
How is cola calculated?
The Social Security Administration plantes an average annual increase in the consumer price index for urban wage workers and administrative workers (CPI-W) from July to September. In other words, it is important to be careful about the number of inflation in August.
The Urban Wage Earning Index reflects the broader index released by the Labor Department each month, but that can vary slightly. Last month, the overall consumer price index rose 2.9%, while the urban wage earner index rose 2.8%.
What was the 2025 cola?
Social Security Beneficiaries saw a 2.5% increase in monthly checks this year, up from a 3.2% increase in 2024. The increase in 2025 was the smallest increase since 2021.
How many people receive Social Security benefits?
According to the Social Security Administration, more than 74.5 million people received Social Security in August. These beneficiaries include retired workers, disabled workers, survivors of deceased workers, and workers who received supplemental security income.
Medora Lee is a money, market and personal finance reporter for USA Today. mjlee@usatoday.com and Subscribe to our free daily money newsletter Personal finance tips and business news every Monday to Friday.
