Karla Abbott looks ahead to retirement next spring, in Increase in living expenses Millions of Social Security recipients receive it every year. But as consumer prices ease, the new boost will be much lower than this year’s 8.7%
Analysts expect the correction in 2024 to be around 3.2%.
The 61-year-old Sioux Falls, South Dakota, resident said she started saving for retirement when she was 18 years old, after working as a nurse for 38 years. But she’s not sure that’s enough, even if she has Social Security benefits.
However, she said Social Security’s annual cost-of-living increase provides some support for her and her husband to plan their non-work time. “The increased amount will help, especially for those of us who are still doing the math on retirement,” she said.
The agency adjusts its benefits annually for inflation. The 2024 Social Security cost of living increase (COLA) will be announced on Thursday.
The program pays out about $1.4 trillion in benefits annually to more than 71 million people, including low-income people with disabilities.
Former Social Security trustee Charles Blahous said the annual COLA announcement is a reminder of the program’s financial pressures. “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 will have to be abandoned,” he said.
The annual Social Security and Medicare trustees’ report released in March said the program’s trust fund would be unable to pay full benefits starting in 2033. If the trust fund is exhausted, the government will only be able to pay out 77% of scheduled benefits, the report said.
COLA is calculated based on the U.S. Bureau of Labor Statistics’ Consumer Price Index, but there have been calls for a different index and for the agency to instead use the CPI-E, an index that measures price changes based on expenditures model for older adults – e.g. Healthcare, food and drug costs.
Mary Johnson, a Social Security and Medicare policy analyst at the Alliance for Seniors, said her organization supports the Social Security Administration using a higher index to best protect seniors from inflation.
Any changes to the calculation would require congressional approval. But amid decades of inaction on Social Security issues and the House stalled after Speaker Kevin McCarthy stepped down, seniors and their supporters say they don’t believe any kind of change will be approved anytime soon.
“I think there are a lot of distractions in Washington,” Abbott said. “Does anyone care what’s going on with Social Security? I don’t know why they can’t come together on something so important.”
The rising cost of living has had a huge impact on people like 83-year-old Louisiana resident Alfred Mason. “Any increase is welcome because it supports what we’re going through,” Mason said.
With inflation still high, he said anything to increase his income “would be very appreciated.”
Social Security is funded through payroll taxes levied on workers and their employers. The maximum amount of income subject to Social Security payroll taxes in 2023 is $160,200, up from $147,000 in 2022.
There have been legislative proposals to strengthen Social Security, but they have not yet passed committee hearings.
AARP CEO Jo Ann Jenkins said the organization “urges Congress to work in a bipartisan manner to keep Social Security strong and provide American workers and retirees with long-term benefits that current and future retirees can count on.” solution. “
“Americans work hard to earn Social Security, and it’s only fair for them to get the money they deserve.”
Johnson, the Senior Citizens Alliance analyst, said Congress “didn’t have any record of successfully reforming Social Security in a timely manner” and that when the program was reformed in 1983, “we were much less divided.”
“Of course, today’s situation is very controversial and it will take a huge effort to get there now.”
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