MONEY MATTERS: People in 9 states to get skimpier Social Security checks from today – map shows where you could get up to $200 less

According to The Sun, The next cost-of-living adjustment (COLA) for Social Security recipients, projected to be the smallest in years, continues to shrink. Based on consumer price index data through August, Social Security recipients could see a modest 2.5% increase in their payments next year.

This 2.5% projected adjustment is a decline from earlier estimates of 2.63% in July and 2.57% in August, as reported by The Senior Citizen’s League (TSCL), a nonpartisan advocacy group for seniors. It marks the smallest increase since 2021 when the COLA was 1.3%.

For an average retired worker receiving a monthly benefit of $1,920, the 2.5% increase would result in an additional $48 per month, according to a recent press release from TSCL.

“A $48 increase in Social Security benefits for 2025 means recipients who rely on Social Security as their primary income will see a minimal boost after their Medicare premiums are deducted,” said Shannon Benton, Executive Director of TSCL. “A 2.5% increase does little to offset rising living costs such as inflation or price increases for essential goods and services.”

The nine affected states are – Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.

The other 41 US states do not charge income tax on residents’ Social Security benefits, according to Investopedia.

Cooling Inflation Impacts COLA

The Social Security Administration (SSA) adjusts benefits annually to help recipients maintain purchasing power amid inflation. These adjustments are calculated based on the Bureau of Labor Statistics’ CPI-W, which tracks changes in prices for goods and services commonly purchased by urban wage earners.

Due to record inflation in recent years, the COLA reached 8.7% in 2023 — the highest in decades — before falling to 3.2% in 2024. The projected 2.5% increase reflects a continued downward trend as inflation eases.

While a 2.5% adjustment is close to historical averages (COLA has averaged 2.6% over the past 20 years), TSCL argues that it may not be enough to cover seniors’ rising living costs. The advocacy group points out that the CPI-W doesn’t always capture the true cost of necessities like housing, groceries, and medications.

“This year’s COLA is crucial because many seniors said their previous increase didn’t keep up with their real-life expenses,” TSCL noted in a June report.

In TSCL’s 2024 Senior Survey, 69% of the 1,550 respondents said their household costs rose faster than their COLA, with food and housing being the primary drivers of the increases.

Rising Financial Pressure on Seniors

The TSCL’s findings show that older Americans are spending more of their income each month just to cover basic expenses. According to its 2024 Retirement Survey, 65% of seniors reported monthly expenses of at least $2,000, up from 55% in 2023. More seniors are also reporting monthly expenses of $4,000 or even $6,000 compared to the previous year.

Nearly 80% of senior households in the 2024 survey said their budget for essentials like food, housing, and prescription drugs had increased over the past year. Additionally, 63% expressed concern that their income may not be sufficient to cover these costs in the months ahead.

“Ensuring that seniors can feed and house themselves with dignity is why we advocate for a minimum COLA of 3%,” said Benton. “Our research shows that two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely.”

October’s COLA Announcement Looms

The official COLA for 2025 will be announced by the SSA in mid-October, following the release of September’s CPI data. The annual adjustment is based on the average inflation during July, August, and September, as measured by the CPI-W.

As Social Security recipients wait for the final decision, many are grappling with the reality of rising costs and a potentially insufficient adjustment to meet their needs. While the projected 2.5% increase is close to historical norms, many seniors worry about maintaining their standard of living amid ongoing financial challenges.

Tax and Benefit Changes

In addition to the COLA, some Social Security beneficiaries in nine states may face higher taxes in September, leading to smaller checks. However, a separate change to Social Security may result in a benefit increase for certain individuals.