Rising inflation means higher cost-of-living adjustments (COLAs), but seniors worry it won’t be enough to make ends meet. (iStock)
The Senior Citizens League (TSCL) recently said that a spike in inflation in March means seniors receiving Social Security benefits could face high cost-of-living adjustments (COLAs) in 2025. stated in the report. report.
Inflation rose faster than expected in March. Consumer prices rose 3.5%, the newspaper said, exceeding February’s 3.2% rise and also beating economists’ expectations for 3.4% growth. consumer price index (CPI) Published by the Bureau of Labor Statistics (BLS). As a result, TSCL has adjusted its 2025 COLA forecast for Social Security benefits to increase by 2.6% from the previous forecast of 1.75%. The COLA is ultimately calculated based on third quarter inflation.
However, the increase in adjustments still falls short of the amount that seniors surveyed by TSCL said they needed to cover living expenses in the current high price environment. Nearly three in four respondents (71%) said their household costs exceeded their 3.2% of the COLA they received in 2023.
“A 2.6% increase in COLA would be about a $45 increase,” said TSCL Executive Director Shannon Benton. “What can I buy with it? Not much. From a long-term decline in purchasing power to increased economic uncertainty, the issue of older people’s inability to make ends meet remains a pressing concern for the Seniors Federation.” Congress is similarly concerned. ”
If you want to reduce your monthly expenses, consider paying off high-interest debt with a lower-interest personal loan. Visit Credible to speak with a personal loan expert and see if this option is right for you.
Americans tap into savings as they struggle with inflation: Survey
Seniors at risk of student loan debt Foreclosure of Social Security benefits
Seniors with student loan debt are at risk of having their Social Security benefits garnished if they are unable to pay their debts. According to 2023 report About 3.5 million Americans over the age of 60 have more than $125 billion in student loans, according to the New America think tank. About 40% of federal loan borrowers aged 65 and older default on their loans.
Social Security recipients risk losing up to 15% of their monthly benefits to repay outstanding loans under the Financial Offset Program (TOP). TOP collects past due (delinquent) debts (such as child support) that people owe to state and federal agencies.
Sens. Elizabeth Warren, D-Massachusetts, and Ron Wyden, D-Oregon, are among several lawmakers calling for changes to this practice.
“It is estimated that Social Security benefits are reduced by an average of $2,500 per year when a borrower is in collections,” the lawmakers recently wrote in a letter. To President Joe Biden. “This could be devastating for people who rely on Social Security as their main source of income.”
If you’re struggling with private student loan debt, you may want to consider refinancing to a lower interest rate. Visit Credible to speak with a student loan expert and get your questions answered.
Many student loan borrowers are missing out on debt relief opportunities with savings plans: study
Higher COLA means higher tax burden for some people
Taxes are another threat to Social Security benefits because they are adjusted for COLA. 23 percent Survey participants Those who have received Social Security benefits for three years or more said they paid their first tax in the 2023 tax season. In 2023, he will have an 8.7% COLA increase, so this percentage is likely to increase this tax season.
If your income exceeds $25,000, your Social Security benefits are taxed. Since the tax went into effect in 1984, this fixed threshold has not been adjusted for inflation. Up to 85% of your Social Security benefits can be taxed if your income exceeds a certain threshold.
If you’re retired or preparing to retire, paying off your debt with a personal loan can reduce your interest rates and monthly expenses. Visiting Credible allows him to compare multiple personal loan providers in one place and choose the one with the best interest rate.
1 in 3 Americans maxed out their credit cards due to inflation: study
Have a finance-related question but don’t know who to ask? Email it to your trusted money expert. Moneyexpert@credible.com Your questions may be answered in Credible’s Money Expert column.
