Seniors Told to Brace for Far Lower Social Security Payment Boost in 2024

The 2024 cost-of-living adjustment (COLA) increase for Social Security recipients is likely to be a fraction of what it was in 2023 and a disappointment to many seniors, according to a nonpartisan seniors group, which found that some 8 in 10 retirees report they’re still reeling from inflation.
Seniors Told to Brace for Far Lower Social Security Payment Boost in 2024
A Social Security card sits alongside checks from the U.S. Treasury in Washington on Oct. 14, 2021. (Kevin Dietsch/Getty Images)
Tom Ozimek
8/11/2023
Updated:
8/11/2023
0:00

The 2024 cost-of-living adjustment (COLA) increase for Social Security recipients is likely to be a fraction of what it was in 2023 and a disappointment to many seniors, according to a nonpartisan seniors group, which found that some eight in 10 retirees report they’re still reeling from inflation.

The latest COLA estimate from The Senior Citizens League (SCL) is around 3 percent, which amounts to a roughly $54 increase in the current average monthly benefit check of $1,789.

The estimate could still change, however, with SCL saying it will release its final projection for the 2024 COLA on Sept. 13.

The Social Security Administration (SSA) is expected to announce the actual COLA for 2024 sometime in mid-October.

To arrive at its official calculation, the SSA takes the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of 2023 (which includes July, August, and September). This figure is then compared to the corresponding data from the previous year.

“The COLA announcement is expected to be October 12, 2023, barring any unforeseen delays from a government shutdown,” Mary Johnson, Social Security and Medicare policy analyst at SCL, said in a statement.

A partial government shutdown in 2013 led to delays in the official COLA announcement.

‘High Prices Continue to Impact Households’

The newest COLA estimate of around 3 percent is roughly in line with the SCL’s earlier projection but far lower than last year’s adjustment of 8.7 percent, which was driven up by multi-decade high inflation.
Annual inflation, which is a key input in the COLA calculations, inched up to 3.2 percent in July from 3 percent in June. While that’s above the Federal Reserve’s target of around 2 percent, the latest inflation reading is well below the 40-year high of 9.1 percent in June 2022.

“In 2023 Social Security recipients received the highest COLA in more than 40 years, but 79 percent of retirees report that lingering high prices continue to impact household budgets significantly,” SCL said in a statement.

In an SCL survey of 1,759 retirees in mid-July, nearly eight in 10 said that essentials like housing, food, and prescription drugs are costing them more today than a year ago.

“High costs have significantly impacted older Americans’ ability to access healthcare,” SCL said in a statement.

Around two-thirds of retirees who participated in the survey said that high prices have forced them to put off dental care, including major work like dentures, bridges, and implants.

Nearly one-third of retirees said they had postponed filling prescriptions or getting medical care.

“Older consumers, especially those with lower retirement incomes remain vulnerable to some of the higher prices that haven’t gone down,” Mary Johnson, Social Security and Medicare policy analyst at SCL, told Yahoo Finance.
Housing costs have risen 7.7 percent over the past year while rent is up 8 percent, the latest inflation data shows, with the estimated 3 percent COLA adjustment a far cry from these figures.

Richard Priedits of Grand Rapids, Michigan, told The Associated Press that he’s noticed higher accommodation costs during his annual vacation.

“We are using credit cards a lot more,” he said as he stopped at the Red Rock Canyon National Conservation Area in Nevada. “The hotel was probably about $100 more ... We filled up the tank this morning. It was like $90.’’

Prices are high back in Michigan as well, he said: “It’s expensive everywhere.’’

Some analysts expect that the pace of inflation in housing will slow down significantly going forward since there’s a lag in rental costs being reflected in the government’s inflation figures.

“Housing disinflation will pick up momentum in the coming months,” Lydia Boussour, senior economist at EY-Parthenon in New York, told Reuters.

Despite the rate of inflation growth slowing from the 9.1 percent peak in June 2022, consumers are still feeling the effects of price pressures.

According to a Bankrate survey in July, 72 percent of Americans don’t feel financially secure. Among them, 63 percent say that high inflation is making it hard for them to be financially comfortable.
Another survey by Bankrate in June found that 68 percent are saving less for unexpected situations because of inflation.

Social Security Fund In Danger

Social Security is facing future challenges due to various factors such as inflation, economic conditions, and lower-than-expected tax revenue.
A recent projection by the nonpartisan Committee for a Responsible Federal Budget (CRFB) estimates that the Social Security retirement fund will be insolvent in 2033, resulting in a 23 percent benefit cut. This means that, in 2033, annual benefits for the average newly retired dual-income couple would be cut by $17,400.

The future of Social Security has become a key political talking point as the 2024 presidential campaign ramps up.

Former President Donald Trump has warned his fellow Republicans not to cut Social Security benefits, while President Joe Biden has vowed to push back against any GOP-led efforts to slash Social Security payments.

CRFB says that any 2024 presidential candidate who “pledges not to touch Social Security is implicitly endorsing a 23 percent across-the-board benefit cut for the 70 million retirees” when the fund runs out of money within 10 years.

Accordingly, there have been bipartisan calls to come up with a fix.

Senate Judiciary Ranking Member Chuck Grassley (R-Iowa) speaks at a hearing with the Senate Judiciary Committee in the Dirksen Senate Office Building in Washington on July 12, 2022. (Anna Moneymaker/Getty Images)
Senate Judiciary Ranking Member Chuck Grassley (R-Iowa) speaks at a hearing with the Senate Judiciary Committee in the Dirksen Senate Office Building in Washington on July 12, 2022. (Anna Moneymaker/Getty Images)

Sen. Chuck Grassley (R-Iowa) said during a July 12 Senate Budget Committee hearing that Social Security must be preserved for future generations.

Mr. Grassley urged Congress to follow the example of President Ronald Reagan and House Speaker Tip O’Neill (D-Mass.) in the 1980s.

“When you have candidates for president on the Republican side and you have a Democratic president in office today who say, ‘We’re not going to touch Social Security,’ how are you going to get things done?” Mr. Grassley asked.

“The only way to reach a deal on Social Security is to follow the Reagan–O'Neill model. That means Congress and the president working in a bipartisan fashion and keeping a chain, a range of options on the table,” Mr. Grassley said, referring to the 1983 agreement that stabilized Social Security for decades.

The Reagan-O'Neill model was basically a combination of increasing payroll taxes and gradually raising the retirement age.

Lawrence Wilson contributed to this report.