Millions of Social Security beneficiaries will see a 3.2% increase in payments in 2024, which is far less than the record increase this year and reflects softening consumer prices.
The average beneficiary will start receiving more than $50 more each month starting in January as a result of the cost-of-living adjustment, or COLA, the Social Security Administration announced on Thursday. This increase was pegged by the AARP at $59 a month.
“This will help millions of people keep up with expenses,” said Kilolo Kijakazi, Social Security’s acting commissioner.
Social Security benefits are received by about 71 million people, including retired people, people with disabilities, and children.
Following this year’s 8.7% benefit rise, which was prompted by record-breaking, 40-year-high inflation that increased the cost of consumer items, on Thursday’s announcement. The following year’s gain is noticeably lower due to the slowing of inflation.
“Compared to last year’s 8.7% increase, this is going to feel small and the perception is that its not keeping up with the inflation and the higher costs that retirees are still seeing,” said Martha Shedden, president of the National Association of Registered Social Security Analysts.
Additionally, a projected rise in Medicare premiums for 2024 will reduce the increase in Social Security’s cost-of-living benefit.
Traditional Medicare has not yet seen a rise, but Medicare Advantage plan costs are anticipated to stay the same.
Senior advocates praised the yearly Social Security adjustment nonetheless.
Payroll taxes from employees and their employers are used to fund Social Security. From $160,200 in 2023 to $168,600 in 2024, the maximum amount of earnings subject to Social Security payroll taxes will increase.
Social Security benefits are the only source of income for retirees, and they are not taxed on that income.
The COLA, according to Nancy Altman, head of Social Security Works, a nonprofit that promotes the social insurance program, is a “reminder of Social Security’s unique importance” and “Congress should pass legislation to protect and expand benefits.”
But in the upcoming years, the program will be severely short on funding.
The program’s trust fund will no longer be able to pay full benefits starting in 2033, according to the annual Social Security and Medicare trustees report, which was published in March. According to the analysis, if the trust fund runs out, the government will only be able to pay out 77% of the benefits that are anticipated.
Although there have been legislative initiatives to support Social Security, none have survived committee hearings.
The majority of American citizens oppose ideas that would reduce Medicare or Social Security benefits, according to a March poll by The Associated Press-NORC Center for Public Affairs Research, and 79% of those surveyed said they oppose cutting the size of Social Security payouts.
There is still no permanent head of the Social Security Administration. Martin O’Malley, a former governor of Maryland, was proposed by President Joe Biden in July to head the organization.
The Consumer Price Index, or CPI, of the Bureau of Labor Statistics is used to determine the COLA. However, there are proposals for the agency to use a new index instead, the CPI-E, which gauges price fluctuations based on aged consumers’ purchasing habits, including the cost of health care, food, and medications.
The calculation cannot be changed without congressional consent. However, due to years of procrastination on Social Security and the House’s current impasse with the removal of Speaker Kevin McCarthy, R-Calif., seniors and their advocates say they lack hope that any kind of change will be adopted anytime soon.
The cost of living modifications will significantly affect individuals like Louisiana resident Alfred Mason, 83. Any rise, according to Mason, is welcome since it helps us cope with our current situation.
He claimed that anything that increased his salary “would be greatly appreciated” because inflation is still high.