COLA Day: Grandma's Raise, Your 2032 Bill

RachelPicture a politician at a podium, hand on heart, swearing nobody is going to touch your Social Security, ever.

JordynI believed it. I also believed my last three step skincare routine would change my life.

RachelOh, man. Okay, so get this, that promise just walked into a very awkward week.

JordynWait for it.

RachelI'm Rachel, and this is Red Flag, where Jordyn and I hold the receipts up to the promises.

JordynTomorrow is COLA Day. The twenty twenty-seven cost of living raise for Social Security gets announced October 14th.

RachelAnd the forecasts are sitting around three and a half percent.

JordynWhich sounds great. Grandma gets a raise.

RachelDoes it, though?

JordynHold on. A bigger raise means prices climbed more. That's not a gift. That's the inflation receipt.

RachelRight. And for us, in our twenties and thirties, there's a second receipt hiding behind it. A countdown, actually.

JordynA countdown to what, exactly?

RachelPatience. Receipt first, countdown second, and we'll get to both in order.

JordynOh, you're gonna make me do math before coffee.

RachelHey, I only tease the hooks. First, what exactly gets announced tomorrow? Okay, so the Associated Press ran a piece on October second saying the projection is expected on October 14th. But what is the COLA in plain English?

JordynCost of living adjustment. Social Security's yearly nudge, so a check doesn't buy less every year. Think of it like a price tag update on your grandma's monthly income.

RachelAnd the number doesn't come from a vibe.

JordynNope. The SSA waits for September inflation data, then announces the figure after that CPI report lands.

RachelSo it's a homework assignment graded by the Labor Department.

JordynBasically, yes. Nobody at SSA gets to pick a favorite number.

RachelOkay, but when does the money show up? Because I assume announced tomorrow doesn't mean deposited tomorrow.

JordynNo way. NewsNation reported that the raise generally takes effect with January benefits.

RachelGenerally?

JordynPlot twist, some recipients can see their first adjusted payment in December because of how SSA's payment schedule works.

RachelHuh. So the raise might arrive early for some.

JordynEarly for some, January for most. Either way, it's one announcement. The payment schedule just decides when you see it.

RachelWhich is a fair reminder that announced tomorrow and spendable tomorrow are two different things, and nobody should budget around a forecast.

JordynRight. Which sounds like a gift, and I'm already suspicious of anything that sounds like a gift.

RachelThat's your skincare brain. Read the label.

JordynAlways. And the label here has a number on it, plus a second line item sitting right next to it.

RachelOh, you're gonna make me ask. So what are the forecasts, and why is a bigger number not a gift? Okay, so the forecasts are in, and they're clustered tighter than my friends at brunch. AARP projects three point six percent.

JordynAnd the others?

RachelThe TSCL and an analyst named Mary Johnson both land at three point five.

JordynSo nobody's at four. Nobody's at two. Everybody's huddled in the same little corner.

RachelRemember, these are forecasts. Nobody has the real number yet.

JordynRight. So don't go buy a boat.

RachelWouldn't be a very big boat. KOMO News ran an example with a slightly lower estimate, three point three percent. On a two thousand dollar monthly check, that's about sixty-six dollars more.

JordynSixty-six.

RachelA month.

JordynA month.

RachelOkay, that's a nice dinner out.

JordynA modest one.

RachelWith an appetizer, maybe.

JordynSee, that's the part I like. Sixty-six dollars is sixty-six dollars.

RachelRachel, think about why it exists, though. The COLA only shows up because prices went up. Nobody hands Grandma a bonus for being a great citizen. It's a refund slip for things that already got more expensive.

JordynFine, but what's the return on it? If groceries and rent ate that increase last year, then sixty-six dollars is just treading water with better branding.

RachelTreading water, but now with a press release.

JordynAnd that's before we ask who it's for. A bump like that means a lot more to someone on a fixed income than it does as a headline.

RachelWhich is exactly why it's a receipt. The people who feel prices climb the most are the ones getting the bump just to catch up.

JordynExactly. And the water's got a drain in it.

RachelOh, you're skipping ahead.

JordynWell, somebody has to. Now, how much of that raise does Medicare take back?

RachelOh, you're gonna love this part. Okay, so Medicare. The standard Part B premium for twenty twenty-six is two hundred and two dollars and ninety cents.

JordynOof, and that's already the old number.

RachelIt's up seventeen ninety from the year before. And the twenty twenty-seven premium, not announced yet.

JordynSo we're doing a bite measurement with no teeth marks to measure?

RachelBasically. We know last year's bite. We don't know this year's.

JordynWait, how does it even reach the retiree? Do they get a bill?

RachelMostly no. Part B is usually deducted straight from the Social Security check.

JordynSo grandma never sees the money leave.

RachelRight. The raise shows up, and the premium has already walked off with part of it.

JordynDude.

RachelDude is right. Nobody has to sign off on the bite each month. It just comes out before the check lands.

JordynAutomatic deductions are great until you're the one watching the number on the deposit.

RachelAnd it's not the same bite for everybody. Higher income beneficiaries may face surcharges on top.

JordynSurcharges. That's the ingredient list's fine print. Nobody reads it until the rash shows up.

RachelYour skincare brain is never off.

JordynNever. So what are the forecasters saying about the damage?

RachelThe Street ran a piece under the headline that Medicare eats the raise. It says projected Part B and D increases will cut into it.

JordynEats it. All of it?

RachelIt doesn't say all, and those premium figures are projections, so I'm not going to hand you a dollar amount I can't back up.

JordynFair, but look at the pattern. Seventeen ninety went up in one year. A raise that size on a modest check could get chewed through fast.

RachelWhich is why the headline number is only the starting line. What lands in the account is a different number.

JordynRaise minus Medicare.

RachelExactly. And that's only the short-term math. The long-term bill sits in a report that came out in June.

JordynOh, you're gonna love this part. I did not.

RachelOkay, so the COLA is the October headline, but the trustees' report landed back in June, and I wanna put them side by side.

JordynWait, June? That's four months before anybody was talking about checks.

RachelJune ninth, to be exact. The Committee for a Responsible Federal Budget put out its analysis of the twenty twenty-six trustees report that same day.

JordynSo the homework got turned in early and nobody read it.

RachelPretty much. The Social Security and Medicare trustees released their report, and the budget crowd started marking it up right away.

JordynOkay, but why pair them? One is a raise and one is a report. Feels like putting a birthday card next to a bank statement.

RachelExactly the point, though. The COLA is the good news headline. Grandma gets a bigger number on the check.

JordynMm-hmm.

RachelEverybody likes a raise. Nobody throws a parade for the footnotes.

JordynAnd I'm guessing the footnotes are where this report lives.

RachelSo what does the balance sheet of that very same system say?

JordynOh, you're building a little suspense here.

RachelA little, and I'm not spoiling it yet.

JordynRude. Is it bad?

RachelOkay, so get this. The date is closer than most people think.

JordynCloser than my next skincare restock? Because I'm already nervous.

RachelOkay, so the Social Security trustees report projects the retirement fund, the OASI fund, runs out in the fourth quarter of twenty thirty-two. Fourth quarter, not even a full year.

JordynWait, twenty twenty-two? That's six years from now.

RachelAnd it's one quarter earlier than last year's report said. So the countdown didn't just tick, it jumped.

JordynLove that for us.

RachelNow, depleted doesn't mean the checks stop. The trustees say income would still cover seventy-eight percent of scheduled benefits.

JordynSeventy-eight, which leaves twenty-two percent gone. Automatic. Nobody has to vote for it. Nobody has to sign anything. It just happens. Oh, man. So a cut with no fingerprints on it.

RachelThink of it like a savings bucket. Once the bucket is empty, benefits can only be paid out of what's coming in.

JordynSo the cushion is gone, and the program is living on whatever shows up that year.

RachelRight. And that's why the number is seventy-eight and not zero. Money keeps flowing in. It just doesn't stretch far enough to cover everything that was promised.

JordynWhich is a very polite way of saying the promise and the paycheck stopped matching.

RachelAnd it isn't aimed at anybody. The Peter G. Peterson Foundation's analysis says a twenty-two percent cut would hit every recipient in twenty thirty-two unless reform passes.

JordynEvery recipient. Not just the rich ones, not just the people who got a nice COLA.

RachelEverybody, Grandma included.

JordynHold on. Rachel, that's the same grandma we just gave a raise to.

RachelPlot twist, right? We spent a whole stretch celebrating her check going up.

JordynBecause it's two sides of one receipt. Prices went up, so the check goes up. Then the system's own books say the check shrinks anyway.

RachelOne piece of paper, two lines. Raise on top, haircut on the bottom.

JordynCheerful, I know. I'm just reading the label.

RachelFair, and here's the part that makes it worse. The retirement fund isn't the only one with a problem.

JordynOh, no. What else is on the receipt?

RachelOkay, so there's a second number in that same trustees report, and it's the one nobody puts on a graphic. The retirement fund and the disability fund, treated as one combined pot, run out in twenty thirty-four.

JordynWait, twenty thirty-four? That's two years after the cut we just did.

RachelTwo years later, and that's the generous version because it blends the two funds together.

JordynAh, so the combined pot is the good news spin.

RachelVery relative good news. The report also says the retirement side only pays out sixty-two percent of scheduled benefits by twenty one hundred.

JordynSixty-two. So the cut doesn't stop. It just sits there forever.

RachelForever, as far as the projection goes. Oh, and Medicare.

JordynOh, man. Here we go.

RachelThe Hospital Insurance fund, the HI Trust Fund, the trustees' summary says its outlook worsened this year.

JordynWorsened how? Give me the ingredient list.

RachelFine. Three items. Higher use of provider services, higher cost assumptions for Medicare Advantage, and less revenue from taxing Social Security benefits under the OBBBA.

JordynHold on. The tax law shrinks the money coming in?

RachelThat's the third cause the summary names, yes. Less revenue from taxing benefits.

JordynHuh. So one of the three is something Washington did on purpose.

RachelI'm only telling you what the summary lists, but the same summary has a blunt line at the end. It says, "Substantial changes are needed."

JordynSubstantial, not tweak, not trim.

RachelTheir word, and from the people who run the books.

JordynAnd that's what gets me about a document like this. It isn't a pundit with a take. It's the official accounting.

RachelWhich makes it hard to wave off a spin on either side.

JordynCool, cool. So the folks who keep the books are waving a flag. We get a raise in October, and everybody's cheering. Who in this story is actually planning?

RachelOkay, so nobody's planning anything. Let me say it flat. This is spending. Entitlements are the biggest line in the budget, and everyone treats touching them like touching a live wire.

JordynMm. I'd call it something else. The problem is a party that promised not to touch Social Security and now has no plan for the shortfall. That's the Creator Brief's framing, and I'm taking it.

RachelPromising not to touch it is easy. The math doesn't care.

JordynRight, and that's my point. Nobody will tell voters the math.

RachelOh, so it's a communications problem.

JordynIt's an honesty problem, Rachel. You can't fix a fund by refusing to say the word fix.

RachelFine, but saying it out loud doesn't close the gap. Somebody has to cut something or pay more. The honest speech still ends in a spending decision.

JordynSure, but the speech comes first. Right now, voters hear hands off, and the one party that promised it has nothing behind it.

RachelOkay, and here's a detail I love. The Peterson Foundation notes that senators elected this year will still be in office when the cut arrives.

JordynWait, this year's class?

RachelThis year's class. They get sworn in, they vote on whatever they vote on, and the cut lands on their watch.

JordynSo nobody can say it's the next guy's problem. It's literally the next guy's problem, and he's on the ballot right now.

RachelExactly, which is why I keep saying spending. Nobody gets to act surprised.

JordynAnd I keep saying nobody leveled with us. Both can be true, but I know which one I'm yelling about at dinner.

RachelHere's where we actually overlap, though. Neither of us thinks hands off is a plan.

JordynRight. A slogan isn't a policy, and a policy needs somebody willing to say what it costs.

RachelNoted. Now, put yourself in your twenties or thirties on that timeline. Okay, so take the date as given. The brief's math for people our age puts the cut in our mid-thirties to forties. So this isn't a retirement problem yet. It's a planning problem.

JordynWhich is why I wanna know how the pot got here. The Peterson Foundation puts the worker-to-beneficiary ratio at two point six, down from three point nine in nineteen sixty-six.

RachelSo fewer workers behind each beneficiary than the last generation had. And I'll be honest, I've never once planned my life around a Social Security check. I treated it like a rumor.

JordynA rumor with a deduction on every paycheck.

RachelOuch. Fine. So what does a sensible person do? My opinion, and it's only an opinion, build your own savings as if the check were a bonus, not the foundation.

JordynThat's the part that makes me twitchy. It feels like paying twice, once into the program, once into your own account, but I get why people lean that way.

RachelOkay. So what would you do differently?

JordynStop treating this like trivia. I want to know what the plan is before I'm making big decisions, not after. So I'd ask every candidate one boring question. What's the plan?

RachelA boring question that nobody wants to answer. I'd add a follow-up. And when does it start?

JordynAnd a third, who pays more or takes less? A plan that won't say that is just a slogan with a nicer font. Civic engagement brought to you by a spreadsheet. Somebody has to bring one.

RachelFine. Time to grade it. Okay, receipt check. The pledge is leave Social Security alone. Nobody's quoting a specific line today, so I'm grading the spirit of it against the SSA Trustees Report.

JordynFine by me, and the report already gave us the trend line. The depletion date moved one quarter earlier than last year's report.

RachelSo the can isn't just sitting there. It's rolling toward us.

JordynSlowly, but the direction is the point. Nobody touched anything, and the date still slid.

RachelRight, and that's what gets me. Leaving it alone sounds like a safe choice, but if the law runs on autopilot, the cut is the thing that happens when you do nothing. Doing nothing is a decision with a number attached.

JordynWait, so what's your grade?

RachelC-minus. The pledge is technically intact. Nobody cut a benefit, but keeping a promise that technically schedules its own cut isn't much of a keep.

JordynOof. I'm harsher. D.

RachelSeriously?

JordynLook. When the thing you promise to protect gets worse on your watch and nobody even proposes a fix, that's not a pledge, that's a hope. A D, and only because the checks are still arriving.

RachelThe checks still arriving is carrying that whole grade.

JordynIt's a very tired grade.

RachelThough I'll defend my C-minus. A pledge that's technically intact still counts for something.

JordynIt counts for a letter. It doesn't count for a smaller check down the road.

RachelOkay. We've been grumpies for a while. Last piece, there's something the left got right this week, and I hate how much I agree with it.

JordynOf course you do.

RachelOkay, friendly fire. And Jordyn, I'm warning you, I'm going first because mine hurts.

JordynOh, man. Go.

RachelThe critics who keep saying Congress has to act before the date, they're right, flat out. I wanted a clever way around it, some spending cut trick, and there isn't one.

Speaker 3You wanted a loophole in arithmetic.

RachelI wanted a loophole in arithmetic. And the trustees already told us what the clock says. Waiting just makes the fix gets uglier.

Speaker 3Mine's a cousin of that. I kept wanting someone to say the quiet part out loud, and the people yelling, "Act now," were the only ones saying it.

RachelWhich is annoying because I don't enjoy agreeing with them.

Speaker 3Nobody does. That's why it's still sitting on the desk.

RachelAnd I'll say this for the critics, at least they're naming a deadline. A deadline is something you can hold someone to.

Speaker 3Whereas hands off has no date attached. You can't grade a slogan, but you can grade a calendar.

RachelFair. So what do people actually walk away with?

Speaker 3Honestly, two open questions. How much of grandma's raise survives once Medicare takes its cut, and who owns the hit when it lands?

RachelAnd the second one has no name on it yet, just a date and a lot of future voters.

Speaker 3Rachel, that's us.

RachelYeah. Okay, we should wrap it up. Where are we sending everybody? Okay, two sentences, no more. The raise is the inflation receipt, and 2032 is the bill.

Speaker 3Fine, but I'll add that nobody in charge wants to name who signs for it.

RachelI land on Congress. Fix it early while the fix is still small.

Speaker 3Which brings us to the homework. Send this episode to one friend who's been biting their tongue at Thanksgiving. You know the one.

RachelSubscribe, leave a rating, and tell us how it went.

Speaker 3We'd promise the check's in the mail, but that's the one thing we can't guarantee.

RachelBring a calculator.