Looking ahead to retirement next spring, Karla Abbott finds comfort in the cost-of-living increase that millions of Social Security recipients get each year. But with consumer prices easing, the new boost will be far lower than this year’s 8.7%.
In fact, the adjustment for 2024 will be 3.2%.
The 61-year-old Sioux Falls, S.D., resident has been working as a nurse for 38 years. She says she’s been saving for retirement since she was 18, but she isn’t certain that will be enough, even with her Social Security benefits.
Still, she says Social Security’s annual cost-of-living increases provide some support, as she and her husband plan out their non-working years.
Every year the agency adjusts its benefits, based on inflation. The 2024 Social Security cost-of-living increase – or COLA – was announced Oct. 26.
The 3.2% COLA for 2024 means the average recipient will receive more than $50 more every month beginning in January, the Social Security Administration said. The AARP estimates that increase at $59 per month.
“This will help millions of people keep up with expenses,” said Kilolo Kijakazi, Social Security’s acting commissioner.
Not everyone feels that way.
“Compared to last year’s 8.7% increase, this is going to feel small, and the perception is that it’s not keeping up with the inflation and the higher costs that retirees are still seeing,” said Martha Shedden, president of the National Association of Registered Social Security Analysts.
Social Security pays roughly $1.4 trillion in benefits to more than 71 million people each year.
Charles Blahous, a former Social Security trustee, says the annual COLA announcement is a reminder about the program’s stressed finances.
“This is an important system, and we need to restore its solvency because if lawmakers can’t do that, then Social Security and its basic financing design would have to be abandoned,” he said.
The annual Social Security and Medicare trustees report released in March said the program’s trust fund will be unable to pay full benefits beginning in 2033. If the trust fund is depleted, the government will be able to pay only 77% of scheduled benefits, the report said.
The COLA is calculated according to the Bureau of Labor Statistics’ Consumer Price Index, but there are calls to use a different index – and for the agency to instead use the CPI-E, which is the index that measures price changes based on the spending patterns of the elderly – such as health care, food and medicine costs.
Any change to the calculation would require congressional approval. But with decades of inaction on Social Security and with the House at nearly a standstill, seniors and their advocates say they don’t have confidence any sort of change will be approved soon.
Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.
There have been legislative proposals to shore up Social Security, but they have not made it past committee hearings.
Jo Ann Jenkins, CEO of the AARP, said the organization “is urging Congress to work in a bipartisan way to keep Social Security strong and to provide American workers and retirees with a long-term solution that ... retirees can count on.”
