The Social Security Administration said Thursday that the yearly cost-of-living adjustment for Social Security claimants will be 3.2% in 2024, a far smaller increase than the previous two years due to inflation.
Starting in January, the average monthly pension for retirees will rise by $59 to $1,907 per month.
Because inflation has been slowing this year, a lower adjustment was required. Raising receivers by 8.7 percent in 2023 and 5.9 percent in 2018 was the biggest since the early 1980s.
“It’s a small amount, but it’s providing some cushion,” said Mary Johnson, a Senior Citizens League Social Security policy expert. To put it another way, “we are hopeful that things will become more affordable.”
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She pointed out that this growth is much larger than the long-term average of 2.6%. The yearly adjustment is based on August through October inflation, which was near four-decade highs a year ago but has since decreased.
The Consumer Price Index, a closely related metric, increased 3.7% in September compared to the same month a year ago, according to the Bureau of Labor Statistics on Thursday.
Even if inflation has slowed, current levels are still rather high. Many seniors are concerned about their personal money, according to a new poll done by The Senior Citizens League.
Sixty-seven percent of respondents said that their monthly household expenditures were at least 10% more than a year before. Furthermore, 56% of Americans are anxious that they will not have enough money in retirement to cover basic living expenditures.
Constantly struggling
Despite the best intentions of the annual adjustment, Social Security and SSI benefits have failed to keep pace with inflation for years, leaving over 71 million individuals struggling to make ends meet. Many retirees in the United States rely heavily on their monthly distributions to cover their basic requirements.
Inflation has lowered the buying power of Social Security benefits by 36% since 2000, according to a study published earlier this year by the Senior Citizens League. If monthly benefits remained at the same buying power level as in 2000, a $517 increase would be necessary.
Tom and Susan Freyers of Palmdale, California, are suffering. The couple, who survive largely on her meager teacher’s pension and Social Security, saved enough money five years ago to celebrate their anniversary with a weekend in Newport Beach. We’re not going to be able to accomplish it this year.
“That money’s gone,” said former advertising executive Tom Freyer, 72. Spend your money on filling up the gas tank. It is deducted from the monthly food budget.
While their monthly benefits increased by 8.7 percent this year, it was still insufficient to keep up with growing prices for basics like as medication, gasoline, and food, as well as homeowner’s association fees. Tom Freyer has taken up screenwriting to complement his income. However, his efforts have been temporarily stalled due to the present writers’ strike. He may have to search for employment if he doesn’t make a deal soon.
Freyer was battling cancer until recently. “If we got hit with some disaster, another medical emergency, or my daughter in a crisis, or something like that, we’d be creamed,” he went on to say.
Rather than the current technique, which represents price variations for urban wage workers and clerical employees, some supporters would like to see the yearly benefit increase linked to an experimental index that measures inflation experienced by the elderly. The former emphasizes the growing cost of healthcare, which accounts for a disproportionately large part of the money spent by retirees.
Nancy Portz, a widow from Sun City Center, Florida, agrees. Her health has deteriorated with age, resulting in ever-increasing medical bills.
“It’s really hard to plan for that unless you’re financially very well off,” said Portz, 74, a former special education teacher and attorney who represented victims of child abuse. It’s shameful that healthcare in the United States is so expensive.
These fees diminish her monthly Social Security payout, making it difficult for her to buy food and other necessities. She had recently become a vegetarian after discovering the astounding price of $2 for one red bell pepper.
Portz’s electricity cost has more than quadrupled and her water bill has nearly doubled since acquiring her modest house in the retirement community in 2016. “If you want to buy healthy food, it’s a fortune now,” she said. The trend “just seems to be upwards.”
Medicare Part B premiums, which are deducted from Social Security benefits, are another expenditure that beneficiaries must account for. The Centers for Medicare and Medicaid Services said Thursday afternoon that the standard monthly premium for 2024 will be $174.70, a $9.80 increase over this year.
The current method used to determine the yearly adjustment, according to Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, is “inherently flawed.” He estimates that when Medicare premiums are included in, the total increase will be roughly $50.
“That is not enough for a tank of gas or half a week’s worth of groceries in many states,” he went on to say. In the words of one analyst: “The net COLA will barely cover one brand-name prescription co-pay for some patients.”
The disadvantage of large rises
Large yearly benefit increases may have a detrimental impact on certain older persons because they may have to pay taxes on a portion of their benefits for the first time or will no longer be eligible for government assistance programs such as food stamps, Medicaid, or housing vouchers.
According to Senior persons League polls, “significant numbers” of low-income senior persons in the United States have lost eligibility for some of these safety net programs in the last year.
Carl Brown, a 70-year-old New York City public housing tenant, understands this all too well. Due to an increase in his Social Security payout, his income-based rent will rise by $74 per month beginning in November. With the increased expense of his credit card debt, rising food costs, and escalating medical care expenditures, he will have an even more difficult time making ends meet.
He doubts that the 2024 modification will be very beneficial.
Brown, a single father and former customer service representative, stated, “My income doesn’t leave me much after paying bills and buying groceries.” As the saying goes, “I don’t know if I’ll ever have enough.”
