Social Security recipients will receive a smaller annual cost-of-living adjustment for 2024, as announced by the Social Security Administration. The 3.2% increase is much smaller than the inflation-fueled boosts of the past two years. Retirees’ monthly payments will rise by $59 on average, totaling an estimated $1,907 starting in January.
The lower adjustment reflects the fact that inflation has moderated this year. While recipients received increases of 8.7% for 2023 and 5.9% for last year, which were the largest since the early 1980s, the current adjustment is still above the average over the past two decades, which is 2.6%.
However, despite the annual adjustment, the cost of living continues to be a concern for many Social Security recipients. A survey conducted by The Senior Citizens League found that just over two-thirds of participants stated that their household expenses remain at least 10% higher than a year ago. Additionally, 56% of respondents worry that their retirement income will not cover the cost of essentials.
Inflation has been a significant factor impacting Social Security payments’ buying power. According to a study by The Senior Citizens League, payments have lost 36% of their buying power since 2000. To maintain the same level of buying power as in 2000, monthly benefits would need to increase by $517.
The high cost of essential items like medicine and healthcare is a particular concern for seniors. Many older Americans rely heavily on their monthly Social Security payments to cover living expenses, and the rising prices have made it increasingly difficult to make ends meet. Some seniors have had to cut back on activities they once enjoyed or take on additional work to supplement their income.
Advocates have suggested tying the annual benefit increase to an experimental index that measures inflation specifically experienced by the elderly. This would better account for the rising costs of healthcare, which make up a significant portion of seniors’ spending.
In addition to concerns about the cost of living, Social Security recipients must also consider other financial obligations such as Medicare Part B premiums, which are deducted from their monthly benefits. For 2024, the standard premium will be $174.70, an increase of $9.80 from this year.
The current formula for determining the annual adjustment has been criticized as flawed, as it provides only a small net increase after Medicare premiums are deducted. This amount may barely cover basic expenses like gas or groceries.
While larger annual benefit increases may appear beneficial, they can potentially disqualify some seniors from government assistance programs or require them to pay taxes on a portion of their benefits. “Significant numbers” of lower-income elderly Americans have already lost access to safety net programs in the past year, according to surveys conducted by The Senior Citizens League.
The current adjustment for 2024 may provide some relief, but it is clear that many Social Security recipients still struggle to afford essential expenses. As prices continue to rise, ensuring that retirement income can cover the cost of living remains a top concern for seniors.