Social Security is a most important anti-poverty scheme introduced by the U.S., President Franklin D. Roosevelt was the one who signed the into law in 1935 as a retirement welfare program for workers, Payments for workers were added by Congress in 1939 and the monthly payment started in 1940. Disability benefits were added in 1956.
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Today one in five Americans receives Social Security benefits, a total of 47 million retired workers 10 million disabled people, and 6milion survivors of deceased workers are dependent on the Social Security payment. Social security benefits are initially calculated from the warning of the workers and if that system had never changed the subsidy would’ve lost purchasing power.
To counter this problem legislation enacted in 1973 instituted annual cost-of-living adjustments(COLA)
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Annual Cost-Of-Living Adjustments Calculation
COLA is calculated based on the consumer price index for wage earners and clerical workers. CPI-W which is calculated from July to September is what ultimately decides the final COLA amount every year. Social Security for 2024 was increased by $50, which resulted in a check of $1,907 for a single retired worker
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Estimated Annual Cost-Of-Living Adjustments for 2025
Inflation is pacing down which could affect Social Security for 2025. COLA may be 2.7% next year according to an estimate from Mary Johnson, an independent Social Security and Medicare policy analyst. The Consumer Price Index tracks the average change in the price paid by consumers on a basket of goods and services that reached its lowest price in 12 months.
Even if the price of goods has come down the people dependent on COLA spend most of their checks on shelter even if the cost of living came down in general the spending will keep increasing for the people who receive these subsidies.
“I don’t think we’re going to erase any COLA this year,” Johnson said. “I think your danger for that is going to be next year, especially if there’s some recessionary trends going on.”
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