Social Security Boosts Boomer Benefits as Inflation Erodes Wages
Social Security raises benefits for retirees, while inflation hurts working Americans’ wages.
2 min read
The Social Security Administration announced its annual cost-of-living adjustment (COLA) on Wednesday, giving nearly 72 million retirees a 3.6 percent increase in benefits next year. Commissioner Frank J. Bisignano stated the average monthly boost will be an extra $75, providing “greater financial stability” for retirees and disabled workers.
Inflation Outpaces COLA Increase
The annual COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, calculated by the Bureau of Labor Statistics (BLS). BLS data showed the CPI rose 3.7 percent annually, up from August’s 3.4 percent. A 9.1 percent surge in gasoline prices in September accounted for more than half of the month-over-month gains, with year-over-year gas prices up 34.2 percent and fuel oil costs rising 74.2 percent.
The financial pain is real: Wage growth fell to 3% (y/y) in September. That’s the lowest in 5 years. Wage growth: 3% Inflation: ~3.4% Inflation has eaten up all wage gains for the average worker since April. Many people are having to make hard choices about what to buy and what to skimp on right now. Yes, consumption is still strong (mainly due to wealthier Americans and people dipping into savings or credit cards), but a lot of people have to think hard about every dollar they spend. Notable: Wages only ticked up 0.1% in the month of September. That was the weakest monthly gain since December 2025.
Social Security is a pay-as-you-go system, where payroll taxes from current workers fund current benefits. Any taxes not immediately paid out are held in federal trust funds and invested in Treasury bonds. As older generations receive more, inflation continues to reduce the real value of wages for working Americans.
Wage Growth Slows, Inflation Outpaces Pay
A chart by Navy Federal Credit Union economist Heather Long revealed that U.S. wage growth has dropped to a five-year low. Long noted that wage increases for typical workers have been entirely offset by inflation since April.
If you solution to Social Security insolvency involves raising taxes on the blue line to give more benefits to the orange line, you should at least acknowledge the profound intergenerational injustice involved. https://t.co/BoebdMK5TX
Meanwhile, a separate chart by Jack Salmon, a research fellow at the Mercatus Center, showed median household net worth by age since 1989. Older Americans over 75 have seen their net worth steadily climb, while younger generations under 35 have largely stagnated.
Since the pandemic, the economic divide between wealthy Americans and the rest of the country has widened, according to a Federal Reserve report. The Fed’s 2025 Survey of Consumer Finances found that overall median family net worth increased 2 percent to nearly $216,000 between 2022 and 2025. However, median net worth for individuals under 35 dropped 23 percent to about $33,000, while those aged 75 and older saw a 37 percent increase to roughly $504,900.
Source: Daily Caller
