Social Security's cost-of-living increase for 2024 will be announced Thursday
WASHINGTON (AP) — Looking ahead to retirement next spring, Karla Abbott $ABT finds comfort in the cost-of-living increase that millions of Social Security recipients get each year. But with consumer prices easing, the new boost will be far lower than this year's 8.7%
Analysts estimate the adjustment for 2024 will be around 3.2%.
After working 38 years as a nurse, the 61 years-old Sioux Falls, South Dakota, resident says she’s been saving for retirement since she was 18. But she isn’t certain that it will be enough, even with her Social Security benefits.
Still, she said Social Security's annual cost-of-living increases provide some support as she and her husband plan out their non-working years. “The increases will be helpful, certainly to those of us who are still doing the math on retirement," she said.
Every year the agency adjusts its benefits, based on inflation. The 2024 Social Security cost of living increase — or COLA — is to be announced on Thursday.
The program pays roughly $1.4 trillion in benefits to more than 71 million people each year, including low-income individuals with disabilities.
Charles Blahous, a former Social Security trustee, said the annual COLA announcement is a reminder about the program's stressed finances. “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 would have to be abandoned," he said.
The annual Social Security and Medicare trustees report released in March said the program’s trust fund will be unable to pay full benefits beginning in 2033. If the trust fund is depleted, the government will be able to pay only 77% of scheduled benefits, the report said.
The COLA is calculated according to the Bureau of Labor Statistics' Consumer Price Index, but there are calls to use a different index — and for the agency to instead use the CPI-E, which is the index that measures price changes based on the spending patterns of the elderly — like healthcare, food and medicine costs.
Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, says her organization supports the Social Security Administration using whichever index is higher to best protect older people from inflation.
Any change to the calculation would require congressional approval. But with decades of inaction on Social Security and with the House at a standstill after the ouster of Speaker Kevin McCarthy, seniors and their advocates say they don't have confidence any sort of change will be approved soon.
"I feel like there's a lot of distraction in Washington," Abbott said. “Does anyone even care about what is happening with Social Security? I have no clue why they can't come together on something so important.”
The cost of living increases have a big impact for people like Alfred Mason, an 83-year-old Louisiana resident. Mason said that “any increase is welcomed, because it sustains us for what we are going through.”
As inflation is still high, he said anything added to his income "would be greatly appreciated.”
Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.
There have been legislative proposals to shore up Social Security, but they have not made it past committee hearings.
Jo Ann Jenkins, CEO of the AARP, said the organization “is urging Congress to work in a bipartisan way to keep Social Security strong and to provide American workers and retirees with a long-term solution that both current and future retirees can count on."
"Americans work hard to earn their Social Security, and it’s only fair for them to get the money they deserve.”
Johnson, the Senior Citizens League's analyst, said Congress “does not have any record of successfully and timely making changes to Social Security,” and when there were reforms to the program in 1983 — “we were far less divided.”
"Certainly the situation today is so contentious, simply getting there now is a huge effort.”
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