Bad News from the FED for Millions of Retirees – Confirms Problem with Social Security Payments as of This Date

The Bad News from the FED for Millions of Retirees who completely rely on Social Security for their monthly expenses. Retired workers who have worked for a specific age under the duration of a minimum of 35 years will be able to receive the benefits of social security payments.

However, the adjustment in the cost of living has been confirmed by the Social Security authorities, which might create bad news for retirees. Citizens, including retirees, should know about the complete information related to the updates issued by the authorities, payment dates, and news out from the department.

Bad News from the FED for Millions of Retirees

This would possibly disappoint Social Security recipients, particularly retirees, as the new cost-of-living adjustment was confirmed. The Federal Reserve has proved that COLA increases may shrink in the coming years as inflation eases.

The Social Security Administration computes the COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Colas of pensions experienced an 18.8% increase within the last three years due to the high inflation. As inflation recedes, large COLA increases may be coming to an end; therefore, future increases will be smaller.

FED has warned millions of retirees

• In September 2024, the Federal Reserve cuts the Federal Funds rate by 50 basis points to 4.75%-5%, the first cut since four years ago.
• This is interpreted as a central bank thinks inflation is broken.
• This is positive for the economy at large but worse for retirees who depend on Social Security.
• Lower inflation costs SSA less to raise benefits; therefore, it leaves more retirees struggling to keep up with increases in living costs.
• Rate cut doesn’t directly impact 2025 COLA but suggests reduced inflationary pressures.
• July and August CPI-W figures (2.87% and 2.35%) indicate a potential 2025 COLA near 2.6%, slightly lower than previous years.
• Declining crude oil prices (around $69/barrel) reflect lower energy costs.
• Low inflation levels are likely to persist, reducing the potential COLA increase.

FED Projects a Lower COLA Increase for Retirees in 2026

• COLA changes may keep retirees ahead of inflation, but they still vary based on historical statistics related to the economic situation.
• These COLA changes do not represent the current financial issues faced by retirees in terms of higher prices for food and electricity.
• Careful budgeting will be the hallmark of these smaller COLA changes.

Could lower rates help retirees in the long run?

Lower interest rates may also mean a reduction in borrowing costs, which significantly saves money in debt for older retirees with mortgages or vehicles on loan. This way, lower borrowing costs should compensate for smaller COLA increases, for instance, so that retirement can afford to stretch more.

• Lower inflation generally, and subsequently lower prices, may even stabilize the spending pattern by seniors further and ease the pressures on their budgets.
• Since COLA adjustments lag and are based on past inflation levels, lower existing inflation should keep cost-of-living rises from being drawn upward too sharply.
• Retirees could avoid the big cost-of-living jumps realized in earlier years and, therefore, maintain better control over fixed incomes.

In general, a controlled inflation climate, together with lower interest rates, could underpin a more balanced and sustainable financial environment for retirees.

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