Social Security's cost-of-living adjustment set at 3.2% — less than half of the current year's increase
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The Social Security Administration said its 2024 cost-of-living adjustment will be 3.2%, a much smaller bump than the 8.7% increase seniors and other beneficiaries received this year. But with inflation still far from its pre-pandemic levels, seniors and other recipients may be at risk of losing financial ground with the smaller adjustment, experts said.
The average retirement benefit will increase by about $50 a month, beginning in January, the Social Security Administration said on Thursday. That will boost the typical monthly payment to $1,907 from this year's $1,858, the agency said.
Next year's COLA, while lower than the current year, is still above the historical norm for the annual adjustment, which has averaged 2.6% over the past two decades, according to the Senior Citizens League, an advocacy group for older Americans. But many seniors are reporting that they are falling behind, with the annual adjustment failing to keep up with their actual spending,
"What we are hearing from our surveys is the household budgets went up by more than the amount of their COLA — that is what is worrying people today," said Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League. "We still have inflation with us."
Despite the annual COLA, some seniors are falling behind partly because the adjustment may not track their actual spending, Johnson noted. The Social Security Administration bases its COLA on what's known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which tracks spending by working Americans.
"The CPI-W assumes that workers spend about 7% of their income on health care — our surveys have found that older adults spend 12% to16%, even up to 24% on health care," Johnson noted.
Poverty rising among older Americans
Despite two years of sizable adjustments — the COLA for 2022 was 5.9%, followed by this year's 8.7% — more seniors are falling into poverty, according to U.S. Census data. About 1 in 7 seniors were living in poverty last year, up from 1 in 10 in 2021, the agency found.
Poverty could spike in coming years if the Social Security isn't stabilized by 2033, when its trust fund is forecast to be depleted, which would result in a benefits cut of about 20% to 25%.
While retirees "can rest a little easier" with the COLA announced on Thursday, they need reassurance that lawmakers will come up with a plan to stabilize the program, the AARP said in a statement.
"AARP is urging Congress to work in a bipartisan way to keep Social Security strong and to provide American workers and retirees with a long-term solution that both current and future retirees can count on," AARP Chief Executive Officer Jo Ann Jenkins said in an emailed statement. "Americans work hard to earn their Social Security, and it's only fair for them to get the money they deserve."
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