Social Security benefits set to rise: What retirees need to know

Well, inflation has continued to moderate over the past year, yet many retired workers are still feeling pinched with post-pandemic price increases. Later this week, Social Security recipients are likely receiving some much-needed relief. Retirees are expecting to see another increase in their monthly benefits thanks to the cost of living adjustment, known as COLA. Yahoo Finance Senior Columnist Carrie Hannon has the details on this COLA adjustment for us. Hey, Carrie. Hey, Brad. And yeah, we'll get the numbers when the inflation numbers come in on Thursday. And what happens is the cost of living adjustment is sort of the equation is they take the inflation data from July, from August and September, and they put it all together in a magic calculator and they come out what the cost of living adjustment for Social Security beneficiaries will be starting in January. So what I'm hearing out there right now, and if we look at what the numbers have looked like in July and August, we're looking at something like a 2.5% increase. Now last year, or I should say this year for 2024, there was a 3.2% bump up. So for 2025, it'll be 2.5%. And what that means is when you look at the average Social Security check is for retirees is around $1,870. We're talking about a bump up of maybe $46. I mean, it is helpful and it's certainly something that's important. And the fact that Social Security does adjust for inflation in itself is a great thing. But the problem here, Brad, is that many seniors still grapple with rising healthcare costs and rising housing costs and other variables that while yes, inflation has cooled overall, there are pockets where seniors spend that really haven't felt that cooling off. And so that's where there is some concern. But at least the statistic is something like one in four seniors, they rely on their Social Security check for 90% of their income needs each month. So that's why this is a super important number and the adjustment is something that matters. Kerry, while we have you, Americans are growing increasingly concerned that they won't be able to retire comfortably. It seems like there's a lack of clear solutions from both politicians and financial planners on how to address this growing crisis. So is there a solution here? Yeah, Brad, it's really a mess out there. I got to tell you, I just have a big piece that's on Yahoo Finance that I spent a year reporting, taking a look at, talking to experts all around about are we in a retirement crisis. And the fact is, Americans love to spend, they are really terrible at saving for retirement. We are undersaved and many people, of course, there's that segment of the population that is making a healthy wage and their employers take money out of their paychecks and automatically they start saving. But in fact, many, many Americans do not have access to an employer provided retirement plan. 50% of the population in the private sector, in fact, do not. So, you know, it's troubling and seniors are heading into retirement with massive amounts of credit card debt and medical debt. So a lot of my experts are very concerned and we're saying like, what can be done? See what happens. Also, Vanguard came out with a report this morning that showing that over a career, someone might change employers eight times and each time they get behind on their retirement savings. And so they calculated it was something like $300,000 in lost retirement savings by switching jobs. Other people, when they switch jobs, and I admit I did this myself when I was young, cash out the retirement money. And so they no longer have that savings and they pay the tax, etc. I think you and I have had this discussion before, but it's troubling. And so how do we get our hands around getting people to focus on their future? And younger people are getting better because new tax laws, new laws that came in this year enabled more people to, more states have started to set aside funds for people to private sector employers who don't have retirement plans to get them into these state sponsored plans. There are about 20 states that now are offering these kinds of things. Also, there's ways for people to, there's more auto enrollment, there's more auto escalation. So these things are happening as part of some of the things that are changes coming through. But there's a lot more that has to be done because, for example, Medicare does not cover assisted living costs, which are soaring. So we're all looking for solutions. Social security, huge issue. We've got nine years until the fund starts to tap down lower and potentially 20 percent of benefits would be cut. So, you know, this is something that the best minds in our country need to start thinking about. And we're hopeful moving forward, we're going to see some of these changes. All right. Some critical reporting there and a lot of fact finding over the past year. Kerry, thanks so much for bringing this to our attention and some continued reporting on it as well. Certainly appreciate it.