Social Security Payments Should Rise 2.7% Next Year

By Douglas A. McIntyre Published Sep 22, 9:45AM EDT

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Social Security will continue to pay the cost-of-living adjustment.
The Senior Citizens League forecasts the increase for next year at 2.7%.

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Social Security Payments Should Rise 2.7% Next Year — © Mature woman wearing swim goggles at swimming pool. Fit active senior woman enjoying retirement in swimming pool and looking at camera. Happy senior healthy old woman enjoying active lifestyle. (Shutterstock.com) by Ground Picture

Social Security may run out of money in 2032, and it will cut benefits to 72% of what the total payout should be. For now, however, Social Security will continue to pay COLA, or the cost-of-living adjustment will increase. One of the most accurate forecasters of the move up is The Senior Citizens League (TSCL).

TSCL puts the increase for next year at 2.7%. Last year, the number was 2.9%. The latest number means inflation is falling—a little.

TSCL says Americans should be happy that there are increases, but they are inadequate in today’s economy. TSCL executive director Shannon Benton said in a statement. “[Our] research shows that many seniors believe the COLA does not adequately capture the inflation they experience.”

About 68% of Americans collect Social Security. The forecast for next year would push the average payment to $2,062. By itself, it barely gets people above the poverty level, if that is all they earn. Pew reports that 27% of adult Social Security recipients have those payments as their only income.

The actual increase is decided based on the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers. It takes the cost of living in the third quarter of the year, and compares it to the same quarter the year before. The change in payments is announced on October 15 each year.

People can take “early retirement” at 62, for which they get less money than at “full retirement” levels at age 67. Or they can get a payment above full retirement if they wait until they are 70.

COLA is not the primary concern for people under 60. That concern is whether Social Security will continue to pay full benefits in seven years. If something is not done to increase the money it can pay out, reduced benefits may be the only way to pay all who are eligible. Several ideas have been floated to solve the problem in the short term. One is to push the age of full retirement to 69 years or beyond. The other is to take people who are earning large amounts of money, either actively or passively, and cut back their benefits. Either of those suggestions is bound to get major pushback.

Would Lifting the Social Security Cap Really Solve Half of the Funding Problem?

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.