The Social Security Administration just announced a 3.2% Cost-of-Living Adjustment (COLA) for 2024. To help retirees and beneficiaries keep up with inflation, Social Security payouts are adjusted by an average of $48 per month.
Many pensioners, however, have voiced dissatisfaction despite this rise, claiming that it falls short of adequately addressing the escalating costs of essential living expenses.
Understanding the 2024 COLA Increase
The yearly COLA adjustment to Social Security benefits is meant to assist recipients in preserving their buying power against inflation.
Consumer Price Index for Wage Earners in urban areas and for Clerical Workers, which tracks inflation over 12 months, is the basis for calculating the rise.
After reaching one of the most significant levels in decades in 2023 with an adjustment of 8.7%, the 3.2% COLA for 2024 is a substantial decrease. Even with this modest increase, which reflects the year-over-year inflation slowdown, seniors remain anxious about rising living expenses.
In monetary terms, the 3.2% adjustment means:
An increase in retirees’ average monthly Social Security benefits of $48 to $1,907 from $1,848 to $1,907.
Benefits recipients with disabilities will experience an average rise of $48 from $1,489 to $1,537.
For individuals who receive both Social Security and SSI, the maximum federal Supplemental Security Income (SSI) payment will increase by approximately $30.
Why It Affects Retirees
Although a rise of any kind is desirable, pensioners are not happy with the 2024 COLA. This irritation stems from a few factors:
1. Increasing Living Costs
Retirees are still having difficulty keeping up with the high prices of necessities despite the 3.2% increase. Grocery, utility, housing, and healthcare costs have all increased dramatically, surpassing the slight COLA increase. A lot of retirees believe that the adjustment is insufficient to meet their actual living expenses.
2. Previous High COLA Expectations
Retirees received an 8.7% COLA rise in 2023, which significantly increased their standard of living for many households. The drastic cut to a 3.2% increase for 2024 is thought to be insufficient, particularly in light of the continued pressure from inflation and the rising cost of healthcare.
3. Fixed Incomes
A large number of retirees are self-employed, with Social Security serving as their primary source of income. They are unable to raise their income or make major budget adjustments when inflation increases. They feel that the $48 increase does not make up for the decline in their purchasing power.
4. Healthcare and Medicare Costs
Another factor that exacerbates retirees’ annoyance is that increasing Medicare premiums would use a large part of the COLA rise. Many retirees worry that the COLA rise will leave them with little to nothing to help with other growing expenses once they pay their healthcare payments.
Breakdown of 2024 Social Security Increase
| Category | 2023 Average Benefit | 2024 Average Benefit | Monthly Increase |
|---|---|---|---|
| Retirees (Average) | $1,848 | $1,907 | $48 |
| Disability Beneficiaries (SSDI) | $1,489 | $1,537 | $48 |
| SSI (Individuals) | $943 | $973 | $30 |
| SSI (Couples) | $1,415 | $1,459 | $44 |
Reasons for the 2024 COLA
The CPI-W, which experienced slight rises in the third quarter of 2023, serves as the basis for the 2024 COLA. Even if inflation has decreased since 2022, pensioners are still affected by high costs for basic needs including food, petrol, and shelter.
According to Federal Reserve projections, inflation will continue to decline in 2024, but for many seniors, this reprieve is much-needed.
The COLA adjustments have changed significantly in recent years:
2023: 8.7%, the highest level in forty years
2022: 5.9%
2021: 1.3%
Retirees find it challenging to create long-term budgets because these variations might cause their benefits to not keep up with their increasing expenses.
What Retirees Can Do to Cope
For individuals dissatisfied with the slight rise, there are multiple tactics to effectively handle escalating expenses:
1. Establish a Tight Budget
By carefully analyzing your income and expenses and, if possible, reducing the amount of non-essential purchases. Reduce as much debt as you can and waste money.
2. Examine Extra Benefits
Retirees may be eligible for other programs that help lower healthcare expenditures, such as Medicare’s Extra Help program or the Supplemental Nutrition Assistance Program (SNAP).
3. Examine Part-Time Employment
If you can, look into part-time employment as a way to augment your income and lessen your financial burden.
Many retirees believe that the 3.2% COLA rise for 2024 won’t be enough to keep up with growing living expenditures, even if it will offer some financial respite. Retirees are left wondering how to stretch their money with an average monthly rise of just $48.
