Social Security beneficiaries will get a 3.2% boost to benefits in 2024, the Social Security Administration announced.
The cost-of-living adjustment is much lower than the record-setting 8.7% increase that the millions of recipients received this year, reflecting the moderation of thte nation's inflation rate.
However, the adjustment is well above the 2.6% average over the past 20 years, according to research by the non-profit Senior Citizens League.
The 3.2% COLA will be effective with benefits payable in January to more than 71 million Social Security and Supplemental Security Income (SSI) beneficiaries, the agency said in its press release, noting that Social Security benefits on average will be increased by more than $50 in January. Notifications of the new benefits will be sent out via mail starting in December.
Payments to those receiving SSI, about 7.5 million, will begin on December 29, the agency said, noting that some people receive both Social Security and SSI benefits.
While the 3.2% increase is above the average COLA that recipients have received in the past 20 years, it is important to realize that the dollar amount that people get is “really very modest for most people,” said Mary Johnson, a Social Security policy analyst for The Senior Citizens League.
“And [seniors] are telling us that their household expenses rose over $150 a month last year and it still never went back down because even though the rate of price increases has slowed, many prices have still gone down,” she said, adding that some prices such as housing and healthcare costs rarely ever decrease.
Johnson said the most recent survey of TSCL revealed growing pessimism about finances in the coming months. Seniors, she said, are also worried about the potential of a reduction in Social Security benefits. The survey showed that 68% of seniors reported that their household expenses remain at least 10% higher than a year ago, although the overall inflation rate has slowed. “This situation has persisted over the past 12 months,” she said.
The top worry of 56% of respondents is that they will not have enough to cover essential expenses in the coming months. And 59% ranked Social Security benefit cuts as their biggest concern, Johnson said.
The annual increase is tied to the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics and some other adjustments that take effect in January of each year are based on the increase in average wages, the release noted. The CPI rose 0.4% in September on a seasonally adjusted basis, the BLS reported today.
But Johnson said that the index used by the BLS is outdated ad does not serve seniors well. She said since 1975, the COLA has been calculated annually using the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which does not survey the costs of retired households over the age of 62.
The league advocates for the Consumer Price Index for the Elderly (CPI-E), which was created in 1983 and, according to the league, better reflects inflation experienced by older Americans. “Older and disabled Social Security recipients spend their money differently than younger working adults,” Johnson said, noting that a bigger share of their incomes usually goes to housing and medical costs, which tend to rise more quickly than overall inflation.
“The failure to adequately adjust Social Security benefits for inflation can lead to a loss of buying power in benefits over time, and lower growth in Social Security benefit income over the course of a retirement,” Johnson said, adding that research by TSCL showed that Social Security benefits have lost about 36% of their buying power since 2000.