The 2024 Social Security increase is projected to be 3.2%, up from the previous estimate of 3%, following the government’s announcement of a rise in inflation for August. The annual inflation rate for August was 3.7%, up from July’s 3.2% but significantly lower than the 40-year peak of 9.1% in June 2024. Excluding the unpredictable food and energy sectors, the core inflation rate stood at 4.3%, a decrease from July’s 4.7%.
The trend is generally decreasing despite the current inflation rate being well above the Federal Reserve’s 2% target. This suggests that Social Security recipients can expect a 3.2% cost-of-living adjustment (COLA) in 2024, as predicted by The Senior Citizens League, a nonprofit organization for seniors. This rate is considerably lower than the 8.7% COLA of 2024 but exceeds the 20-year average of 2.6%.
Mary Johnson, a The Senior Citizens League policy analyst, commented that while reduced inflation is favorable, the COLA increases in most years are often insufficient. The purpose of annual COLAs is to ensure that the purchasing power of Social Security beneficiaries isn’t diminished by inflation. However, the COLA hasn’t been able to keep up, leading to increased poverty among seniors between 2020 and 2021. Based on data from the Census Bureau, the poverty rate for older adults rose to 10.7% in 2021, up from 9.5% in 2020.
Social Security typically covers only about one-third of an average middle-earner’s wages. To compound the issue, 59% of older adults receive Social Security benefits before retirement, resulting in permanently reduced benefits. Despite the current inflation rate being lower than the 8.7% COLA beneficiaries received, many seniors have been unable to offset the financial setbacks experienced during the previous two years of high inflation.
Another concern for seniors is the Medicare Part B premium, usually announced in November and automatically deducted from monthly Social Security payments. The Medicare Trustees have projected the monthly Part B premiums to rise to $174.80 in 2024, up from $164.90 in 2024. Taxes also reduce Social Security benefits. A survey by The Senior Citizens League in mid-July revealed that 23% of beneficiaries paid taxes on some of their benefits for the first time in the 2024 tax season.
Many seniors are struggling to cope with rising costs. A survey in July found that 79% of respondents felt essential items were more expensive than the previous year. Consequently, many are delaying medical care to manage daily living expenses. Two-thirds have deferred dental care, 43% have put off eye exams or bought prescription glasses, and a third have delayed medical care or prescription refills due to unforeseen bills and out-of-pocket costs.
The Social Security Administration calculates COLA based on the average annual increase(from July to September) of the CPI-W. The Senior Citizens League uses this data to project the next year’s COLA. About 70 million Americans benefit from programs managed by the Social Security Administration. As of December 31, nearly 90% of individuals aged 65 and above received a Social Security benefit. For many, this is a significant source of income. In July, the average monthly check for beneficiaries was $1,703.98. A 3.2% COLA would translate to an additional $54.50 each month.
The upcoming COLA will be announced in October and will take effect from January 2024.
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