Social Security recipients are expected to see some financial relief soon, thanks to a projected cost of living adjustment (COLA) increase. The Social Security Administration (SSA) adjusts benefits annually to help recipients keep up with inflation. This year, the COLA is projected to rise by 2.6 percent, according to new estimates from the Senior Citizens League (TSCL). This marks the fifth straight month the forecast has gone up, reflecting continued inflationary pressures. The final COLA figure is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during July, August, and September, compared to the same period the previous year. It’s typically announced in early October and affects over 72.5 million recipients.
In addition to the COLA increase, tax relief is on the horizon for many seniors under a new law signed by former President Donald Trump. The One Big Beautiful Bill Act provides an additional $6,000 tax deduction for individuals aged 65 and older earning less than $75,000, and $12,000 for married couples filing jointly with incomes up to $150,000. Deductions will phase out above these thresholds. According to the SSA, this legislation could significantly reduce or eliminate the tax burden for about 90 percent of recipients, allowing them to retain more of their Social Security income. The SSA Commissioner praised the move as a major step in protecting retirees, but TSCL believes more should be done. The organization argues that the law does not sufficiently support the 7.3 million seniors living on less than $1,000 per month, which is below the federal poverty line.
Meanwhile, the SSA is preparing to go paperless. Starting September 30, the agency will no longer mail paper checks to beneficiaries. All payments will be made electronically, either by direct deposit or through the Direct Express prepaid debit card. Some recipients will be able to request waivers to continue receiving paper checks under specific conditions. The SSA says this transition aims to enhance security and cut costs, as paper checks are significantly more likely to be lost or stolen.
Despite these upcoming changes, long-term challenges remain. The federal trust funds that support Social Security are projected to become insolvent in just over seven years, according to the Committee for a Responsible Federal Budget (CRFB). If Congress fails to intervene, retirees could face an annual benefit cut of around $18,100. The CRFB warns that without reforms, a 23 percent across-the-board reduction in benefits could hit all recipients within eight years. The organization calls on policymakers to implement sustainable solutions to preserve the program’s future. In the meantime, seniors and advocacy groups are continuing to press for reforms, including a more accurate COLA calculation that better reflects their spending patterns and a one-time catch-up payment to offset past shortfalls.
