A Lower COLA (cost-of-living adjustment) is forecast for Social Security recipients in 2024. The agency projects a 3.1% increase, worrisome for retirees already struggling to make ends meet. The increase is also significantly lower than the 8.7% boost seen in 2023, which was the highest increase in four decades.
According to The Senior Citizens League, inflation remains higher than the forecast 3.1% increase. Specifically, consumer prices are up 4.9% from the same time last year. Therefore, the TSCL warns that even though the inflation rate is slowing down, the current COLA estimate does not necessarily translate to lower prices. Mary Johnson, Senior Analyst, at TSCL says, “The trend has been a decline in the inflation rate, and that has been the case really since last June.” However, Johnson also told CBS News, “About 53% [of recipients] say that their household expenses in 2022 rose by more than 8.7%, so they didn’t feel their COLA adequately covered rising costs in the past year.”
Lower COLA estimate no match for Inflation
Moreover, The TSCL report highlights that retirees who have been receiving Social Security benefits since before 2000 have lost 36% of their buying power. This loss of purchasing power is due to the fact that the cost of goods and services that retirees typically purchase has increased by 141.4% over the same period, while Social Security COLAs increased benefits by 78%. The TSCL estimates that to maintain the same level of buying power as in 2000, these retirees would need an extra $516.70 per month ($6,200 in 2023).
The average Social Security recipient receives $1,782 per month, which translates to an annual income of about $21,384. This amount may not be enough to cover the cost of living for many retirees. The 3.1% COLA increase in 2024 may not keep up with rising expenses and inflation, further increasing the financial strain on Social Security beneficiaries.