In 2024, things might be harder for seniors who depend on Social Security to meet their basic needs. Recent reports say that inflation is slowing down. However, this may not mean as much for retirees who are looking forward to the Cost of Living Adjustment (COLA), which is a yearly change in their Social Security payments.
This change is meant to help keep up with rising costs of living, but it will be less than in recent years, which could put a lot of people in a tough financial spot.
The most recent predictions from The Senior Citizens League (TSCL) say that the COLA for Social Security payouts in 2024 will only be 2.5%. It’s a big drop from last year’s 3.2% and a huge drop from 2022’s 8.7%, when the country was dealing with very high inflation.
The Social Security COLA forecast for 2024: What to expect
Simple: inflation has slowed down, which is why this change is less. In fact, the Consumer Price Index (CPI) shows that yearly inflation is now only about 2.5%, which is a long way from the high point of 9% we saw in 2022. On the surface, this may sound like good news, but a lower COLA also means that seniors’ monthly payments will go up by much less.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to measure inflation and figure out the Social Security COLA.
This calculation takes the average of the inflation rates from July, August, and September and compares them to the rates from the previous year. Once this number is known, the change is made public in October and starts to show up in payments in December.
The simple goal of COLA is to make sure that Social Security payments keep their buying power even as the cost of living goes up. For now, though, prices have not gone down even though inflation has slowed down. Many things are still pricey, and a 2.5% increase in Social Security payments might not be enough to cover the real costs that seniors are facing.
What impact will this adjustment have on Social Security beneficiaries?
For people who get Social Security benefits, a 2.5% raise would mean an extra $48 a month on average. Even though any raise is welcome, this one is a lot less than the ones seniors got in the past, when inflation was higher and wages went up more.
The trouble is that prices for basic things like food, medicine, and energy are still higher than they were in the past, even though inflation has slowed. This means that seniors who depend on Social Security to pay for most of their weekly costs might find it harder to get by, even with this small change.
Who depends on Social Security, and why is it so crucial?
Social Security isn’t just an extra source of income for many seniors; it’s their main source of income. The Senior Citizens League did some study and found that about two-thirds of seniors get more than half of their monthly income from Social Security. In fact, 28% of retirees count on these payments alone to cover their basic costs of living.
This is why groups like TSCL push for a COLA of at least 3%. Their argument is that many seniors could be in tough spots if there isn’t a proper change, especially since prices are still high even though inflation is slowing down.
The fight for greater protection for seniors
It’s not just about money when it comes to COLA and how it affects retirement; it’s also about their sense of worth. As the cost of living goes up, it’s more important than ever to make sure that adults can meet their basic needs.
There are advocacy groups and some lawmakers who want to raise the minimum adjustment for Social Security so that seniors don’t have to deal with a falling COLA and rising prices.
Shannon Benton, who is the executive director of TSCL, stresses how important it is to have a suitable COLA. “It is very important to make sure that seniors have enough to eat and live with honor.”
“That’s why we’re pushing for a COLA of at least 3%,” Benton says. The difference between a 2.5% and a 3% COLA may not seem like much, but for people who live off of Social Security, those extra dollars can make a huge difference in their life.
The challenge of fixed incomes in an inflationary environment
For seniors on fixed incomes, the effects of rising prices over the last few years are still very heavy, even though there has been progress in lowering inflation. For many, every time the prices of basic goods and services go up, it puts a big strain on their finances.
A 2.5% COLA will help, but it might not be enough to cover the rising costs that have been building up over the past few years. There is a lot of uncertainty for retirees because prices may stay high and their incomes don’t grow at the same rate.
Also, the slower rate of inflation doesn’t always show how things really are for many seniors. Some costs, like healthcare and prescription drugs, have kept going up, often faster than general inflation. These costs affect older people more than younger people. This can make it hard for the COLA to keep up with the real financial stress that seniors are under.
People who only get their money from Social Security can feel overwhelmed by even small increases in costs, especially if their payments don’t keep up. Because of this, more and more people are worried that the 2024 COLA might not be enough to help seniors keep up their standard of living.
It’s also scary to think about what a smaller COLA will mean in the long run. If inflation goes up again in the future, it could be even harder for retirees to make up after years of smaller increases.
This shows how important it is to keep talking about how Social Security benefits are calculated and whether more should be done to help those who depend on it the most.
Also See:- The payment plan for September and October for Social Security Disability Insurance (SSDI)