It’s increasing, but is it enough?
Stubbornly high inflation has The Senior Citizens League (TSCL) raising its 2025 COLA estimate to 2.4%, based on the Bureau of Labor Statistics’ Consumer Price Index (and increase of 3.2%) released Tuesday.
While it’s still very early, the one percentage point jump in just one month reflects ongoing volatility in the face of higher prices and diminished purchasing power. Shelter, medical, and transportation prices remain higher than the overall inflation rate.
Looking back, the organization found that the Social Security COLA for 2024 increased the average retiree benefit by $59 per month, yet 93% of respondents to a recent TSCL survey said their household expenses increased by more than $59 per month for 2023.
The majority, 43%, report household expenses exceeding $185 per month in 2023.
TSCL also warned that Social Security beneficiaries could be riding an inflation rollercoaster this year, courtesy of 2023’s 8.7% COLA—alongside static income thresholds for taxation of benefits.
The organization reminded Social Security recipients that they will need to run the numbers this tax season to determine if their Social Security benefits are taxable — perhaps for the first time. TSCL claimed that during the 2023 tax season, 23% of survey participants who received Social Security for three years or more said they paid tax for the first time (while 28% said they were either uncertain or hadn’t been claiming for three years).
Mary Johnson, Social Security and Medicare policy analyst for TSCL, said they expect that the higher Social Security income will not only cause more Social Security recipients to pay taxes on their benefits this tax season, “but taxes are taking a bigger portion of Social Security checks in 2024.”
While inflation has continued to boost benefit levels, and unlike federal income tax brackets, the income thresholds that subject Social Security benefits to taxation have never been adjusted for inflation since the tax became effective in 1984. It means Social Security benefits above certain income levels are subject to taxation.
