Social Security Trust Fund is expected to dry out within 10 years
The main trust funds used to pay Social Security benefits are projected to run out by 2033 if lawmakers do not make changes to the system.
Straight Arrow News
According to new estimates, Social Security recipients could rise 2.7% from the estimated 2.5% last month, based on the latest inflation report last month.
The consumer price index for Urban Wage Workers and Office Workers (CPI-W), an index used to calculate annual adjustments for Social Security benefits, rose 2.6% in June. Overall inflation rose 2.7% from a 2.4% increase in May. The Federal Reserve’s inflation target is 2%.
Cost of living adjustments, or Coke, is intended to help Americans keep up with inflation so that they can maintain their standard of living each year. But the hike is lacking, especially when Medicare Premium is rising with faster clips, says seniors. It will happen in 2025 and will do so next year.
“It’s not uncommon for Part B premiums to consume a lot of their annual coke, leaving no extra extra to cover other big increases in costs,” says Mary Johnson, Independent Social Security and Medicare Policy Analyst.
How fast is Medicare Premium rising?
The cost of Medicare Part B has risen several times faster than the average rate of increase in recent years.
According to the 2025 Medicare Fiduciary Annual Report released in June, the 2026 Medicare Part B Premium is expected to increase from $185.00 in 2025 to $21.50 a month, or $206.50 on a jump of 11.6%. This has been the largest part since 2022 when 2022 saw a 14.5% increase.
The Social Security Administration automatically deducts Part B premium costs from the Social Security benefits of most Medicare recipients. A large Medicare part-time job means a reduction in monthly checks.
“Medicare recipients will quickly point out that Part B premiums can take all or all of their annual coke frequently, leaving no extra room to cover other significant increases in costs like housing and groceries,” Johnson said.
Who hurts the most?
If Cola rises 2.7%, an average increase of 2.6% over the past 21 years, and Medicare Part B increases by 11.6%, those with the lowest Social Security benefits suffer the most.
“If COLA is 2.7% in 2026, a $21.50 Part B Premium Jump will accept all beneficiaries of colas that are less than about $800,” Johnson said. “This is especially true for any individual who receives Social Security retirement, spouse, or widow or widow’s benefits.”
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 pay particular attention to the number of inflation in July.
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 2.7%, while the urban wage earner index rose 2.6%.
How many people receive Social Security benefits?
According to the Social Security Administration, 74.269 million people received Social Security in May. These beneficiaries include retired workers, disabled workers, survivors of deceased workers, and workers who received supplemental security income (SSI).
The average monthly benefit was $1,860.64 in May.
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.
