Social Security check increase in line with inflation but trails key expenses

Millions of Social Security recipients will see a 2.8 percent cost-of-living increase in their monthly checks next year, the agency said Friday.

The ongoing government shutdown delayed the annual COLA announcement, which is tied to the consumer price index, by about a week. On Friday, the Bureau of Labor Statistics said prices rose 3 percent in September, year-over-year, compared with 2.9 percent in August.

The COLA means a senior who collects the monthly average of nearly $2,000 will see an additional $56 come January.

While the increase is in line with overall inflation for the year, it trails categories that are particularly relevant to older adults. Friday’s CPI reading showed that medical care climbed 4 percent from a year earlier, while electricity and piped gas jumped 5 and 11.7 percent, respectively.

AARP, the interest group for older adults, suggested in advance of Friday’s announcement that the benefits bump would fall short of filling seniors’ needs in today’s economy. According to an AARP survey conducted in September, 77 percent of older adults feels a cost-of-living increase around 3 percent would not be “enough to keep up with rising prices.” That view held across political affiliation, with 75 percent of Republicans and 79 percent of Democrats calling 3 percent insufficient.

More than 51 million retirees receive Social Security benefits. The agency also disburses disability benefits for more than 7 million people, and 8 million receive survivor and dependent benefits.

Social Security is the only source of income for more than 1 in 4 adult recipients. Each person’s monthly benefit is based on their earnings and age at retirement.

The program faces a potential crisis in the years ahead: As America’s population ages, shifting the balance between workers who contribute to Social Security and those who benefit from it, the trust fund that fuels the program is running out. The trustees’ latest estimate predicted the trust fund will run dry in 2033. At that point, the program could only pay beneficiaries using new money coming in from payroll taxes. Without a change to the law, that would mean a 23 percent cut in benefits.