Social Security recipients will receive an annual cost-of-living adjustment of 3.2% for 2024, a much smaller increase than the inflation-fueled boosts of the past two years, the Social Security Administration announced Thursday.
Retirees’ monthly payments will rise by $59 to an estimated average of $1,907, starting in January.
“It’s a small amount, but it’s providing some cushion,” said Mary Johnson, Social Security policy analyst at The Senior Citizens League, an advocacy group. “We have the hope that things are going to be more affordable.”
The boost remains well above the average over the past two decades, which is 2.6%, she said. The annual adjustment is based on an inflation metric from August through October, which has cooled after being around four-decade highs a year ago.
A related metric, the Consumer Price Index, increased 3.7% in September, compared with a year ago, the Bureau of Labor Statistics announced Thursday.
Still, while the rate of increase has slowed, prices remain high. Many seniors are concerned about their personal finances, according to a new survey by The Senior Citizens League.
Just over two-thirds of participants say their household expenses remain at least 10% higher than a year ago, the survey found. And concerns that retirement income won’t cover the cost of essentials is a top worry of 56% of respondents.
Though the annual adjustment is aimed at helping the more than 71 million recipients who receive Social Security and Supplemental Security Income benefits contend with rising prices, benefits haven’t actually kept pace for years. Many older Americans rely heavily on their monthly payments to cover their living expenses.
Inflation has caused Social Security payments to lose 36% of their buying power since 2000, according to a study released earlier this year by The Senior Citizens League. Monthly benefits would have to increase by $517 to maintain the same level of buying power as in 2000.
Tom and Susan Freyer of Palmdale, California, are feeling the pinch. The couple, who depend largely on Social Security and her small teacher’s pension, were able to set aside enough funds five years ago to celebrate their anniversary with a weekend in Newport Beach. That’s out of the question this year.
The 8.7% boost in their monthly benefits for this year helped, but it is not enough to cover the higher cost of medicine and homeowners’ association fees, in addition to gas and groceries. Tom Freyer has taken up writing screenplays in hopes of earning some extra bucks, though the recent writers’ strike put his efforts on hold temporarily. If he’s not able to sell one soon, he thinks he’ll have to get a job.
“If we got hit with some disaster, another medical emergency or my daughter in a crisis or something like that, we’d be creamed,” said Freyer, who until recently was battling cancer.
Some advocates would like to see the annual benefit increase tied to an experimental index that measures inflation experienced by the elderly, rather than the current metric, which reflects price changes for urban wage earners and clerical workers. The former puts more weight on cost increases for health care, which makes up a much larger share of seniors’ spending.
Nancy Portz, a widow who lives in Sun City Center, Florida, agrees. As she ages, her health has deteriorated, leaving her with more medical bills.
“It’s really hard to plan for that unless you’re financially very well off,” said Portz, 74, a retired special education teacher and attorney who represented victims of child abuse. “In this country, it’s shameful that we pay so much for medicine and medical care.”
Those expenses eat away at her monthly Social Security payment, making it harder for her to afford other necessities, including food. A vegetarian, she was shocked to recently find that a single red bell pepper cost $2.
“If you want to buy healthy food, it’s a fortune now,” said Portz, who has also seen her electric bill more than triple and her water bill roughly double since 2016, when she bought her small house in the retirement community. “It just seems to be going up and up and up.”
Social Security recipients also have to factor in their Medicare Part B premiums, which are automatically deducted from their monthly benefits. This year, the standard monthly premiums are $164.90, a decrease of $5.20 from 2022, which saw a large spike in premiums.
The Centers for Medicare and Medicaid Services has yet to announce the premiums for 2024, but the Medicare’s trustees estimated earlier this year that the monthly premium would rise about $10.
The current formula for determining the annual adjustment is “inherently flawed,” said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. He noted that the net increase will be about $50 after Medicare premiums are deducted.
“That is not enough for a tank of gas or half a week’s worth of groceries in many states,” he said. “The net COLA will barely cover one brand-name prescription co-pay for some patients.”
Hefty annual benefit increases could end up hurting some senior citizens because it could push them above the thresholds for certain government assistance programs, such as food stamps, Medicaid and rental assistance, or require them to pay taxes on a portion of their benefits for the first time.
“Significant numbers” of lower-income elderly Americans have lost access to some of these safety net programs over the last year, according to surveys conducted by The Senior Citizens League.
Carl Brown, 70, who lives in public housing in New York City, knows that all too well. His rent is tied to his income and is going up $74 a month starting in November because of the increase in his Social Security benefit. It will leave him struggling even more to pay his medical and grocery bills, as well as the higher interest rate on his credit card debt.
He doesn’t think the adjustment for 2024 will help too much.
“My income doesn’t leave me much after paying bills and buying groceries,” said Brown, who worked as a customer service representative and is divorced. “I don’t know if I’ll ever have enough.”
This story has been updated with additional reporting.