Source: Investopedia
Every October, the Social Security Administration announces a cost of living adjustment (COLA), and this year it is 3.6%, the largest cost-of-living increase since 2023. For the average retired worker, that comes to about $75 more a month starting in January. The headlines treat it as good news, and for most households it is. Yet the story of a retirement is rarely written in the month the raise is announced, and the clearest way to see that is to follow a single check.
Consider Gloria, a composite created for this piece. She is 66, a retired school cafeteria worker in West Philadelphia who claimed her benefit at 62. Her check is $1,500 a month, well under the national average of about $2,095. Her raise comes to $54. She notices it the way anyone would, with a small lift, and then the subtractions begin. Medicare’s Part B premium comes straight out of her check, and the Trustees project that it will climb $6.60 to $209.50 next year, though the official figure is not due until November. That leaves her $47.40.
If the check is nearly all she has, income tax is not Gloria’s worry, but it is a worry for many other beneficiaries. By one Social Security Administration estimate, about 40% of beneficiaries owe federal income tax on part of their benefits, and the income thresholds that trigger the tax are not indexed to prices, so every raise pulls more households toward the line. Nobody has done anything wrong here. A raise tied to prices simply cannot outrun costs that are set somewhere else, and it can arrive already partly spoken for.
What deserves more attention is what the $54 is a percentage of, because that figure was settled long before this October. The first place it was settled was the day Gloria started collecting. For anyone born in 1960 or later, full retirement age is 67, and claiming at 62 permanently reduces the benefit by about 30 percent. Every raise since has been calculated on the smaller amount, so a 3.6% increase on 70% of a benefit is 3.6% of less. The decision felt small at 62, a few years of relief from work that had worn her body down, and it has been compounding quietly ever since.
The second place is the base itself, and here Gloria’s story stops belonging to her alone. Researchers at Boston College’s Center for Retirement Research project that Black beneficiaries born between 2001 and 2010 will receive average lifetime benefits 19% lower than white beneficiaries. That concerns younger workers, but the NAACP describes the same pattern among today’s retirees, noting that lower lifetime earnings and thinner pensions leave older African Americans leaning hard on the program. In 2017, 58% of unmarried older African Americans and 35%of married ones received at least 90% of their income from Social Security. The same percentage raise is fair on paper, but it lands on a smaller check that carries more of the household.
Source: The Motley
Then there is what lies ahead. The 2026 Trustees report projects that the retirement and survivors trust fund can pay full benefits until the fourth quarter of 2032, after which continuing income would cover 78% of scheduled benefits unless Congress acts. On Gloria’s $1,500 check, a 22% cut would come to $330 a month, more than six times this year’s raise. That is arithmetic and not a forecast of what lawmakers will do, but it shows which number deserves more of the attention. The raise is an economic adjustment, while the shortfall, if it comes, will be a political decision, and the people most exposed to it have the most reason to follow it.
An honest objection deserves a hearing here. Advice about when to claim flatters people who have options. A woman with a physically punishing job or failing health may not be able to wait until 67, and a household living on a small check has little room to rearrange anything. The Boston College researchers themselves found that adjusting Social Security would only modestly narrow the racial gap and that real equity would likely require progress toward equality in labor market outcomes. That is mostly right about causes, and it argues for pressure on lawmakers and employers. It does not argue against checking one’s own numbers this fall, because the checking costs nothing and the people with the least slack can least afford a surprise.
Three small steps remain for anyone in Gloria’s position. A Social Security account lets beneficiaries view the COLA notice online in late November. The real Medicare premium can be checked against the $209.50 projection once the Centers for Medicare and Medicaid Services confirms it. And SSA’s age-reduction chart is worth studying before any claiming decision, ideally with a nonprofit counselor.
In January, Gloria’s check will grow by roughly $47, and she will probably spend it before the month is out. Forty-seven dollars a month is real money to Gloria, and the arithmetic above takes nothing away from that. Her own claiming decision is behind her, but the relatives and neighbors still years from theirs have not made it yet. What retirement is worth is settled earlier than the raise, at a kitchen table, over a decision that seems to cost nothing at the time.
Disclaimer: General information, not financial or legal advice.
Anand Subramanian is a freelance photographer and content writer based out of Tamil Nadu, India. Having a background in Engineering always made him curious about life on the other side of the spectrum. He leapt forward towards the Photography life and never looked back. Specializing in Documentary and Portrait photography gave him an up-close and personal view into the complexities of human beings and those experiences helped him branch out from visual to words. Today he is mentoring passionate photographers and writing about the different dimensions of the art world.
