The Senior Citizens League expressed expectations that the Social Security cost of living adjustment (COLA) for 2024 will likely reach 3.2percent. While this anticipated increase may offer some relief to retirees, concerns linger that it won't fully address the growing financial needs of older Americans.
According to the Senior Citizens League's estimates, a 3.2percent COLA would translate to an approximate $57 increment in monthly Social Security benefits. For the average recipient, this would raise their monthly benefits to $1,790.
The calculation of the cost of living adjustment relies on the average inflation readings for the months of July, August, and September. Specifically, it is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is published by the Bureau of Labor Statistics (BLS).
During the relevant period, the CPI-W witnessed a 3.6% increase in July and a 3.4percent increase in August. These inflation rates have been influenced by various factors, including pandemic stimulus payments, heightened consumer spending, and widespread supply chain disruptions. Consequently, the Federal Reserve has implemented rapid interest rate hikes, leading to the highest benchmark U.S. interest rates in over two decades.
Despite the annual increase in Social Security benefits, the Senior Citizens League contends that the rising costs of essential goods and services for retirees are outpacing the rate of benefit growth. This issue becomes particularly acute for older beneficiaries, with pre-2000 retirees requiring an additional $500 in monthly benefits just to maintain the same purchasing power they had in 2000.
Previously, the Senior Citizens League had expressed concerns that the COLA for the upcoming year could be as low as 2.7percent.
While wage growth has shown promise for U.S. workers, retirees no longer earning a paycheck are left to grapple with the consequences of inflation. The league emphasizes that many people retire before reaching the age where they would be entitled to full Social Security benefits.
The official COLA adjustment for 2024 is expected to be announced by the Social Security Administration in mid-October.
Overall, the U.S. Consumer Price Index reported a 3.7percent increase in August, based on data from the BLS. Rising gas prices contributed to the recent uptick in consumer prices, while the cost of shelter has surged by more than 7percent over the past year. Additionally, expenses related to healthcare, including medications and medical equipment, continue to rise.
As retirees anxiously await the final COLA decision, concerns about the adequacy of Social Security benefits in meeting their evolving financial needs persist, casting a shadow on their financial security in retirement.
