In 2024, Social Security payments received a 3.2 percent increase due to the annual cost-of-living adjustment (COLA).
However, numerous seniors are expressing dissatisfaction, arguing that this adjustment does not adequately offset the rising costs they are facing across various sectors.
Annually, the Social Security Administration adjusts Social Security payments to account for inflation through the cost-of-living adjustment (COLA).
While the COLA experienced a significant increase of 8.7 percent in 2023, it decreased to 3.2 percent in 2024.
This translates to a modest increase of slightly over $50 per month.
Social Security: Adjustments vs. Senior Expenses
Critics argue that despite these adjustments, Social Security payments fail to sufficiently address the escalating costs seniors encounter, spanning groceries, fuel, housing, and other essentials.
Presently, as per the National Council on Aging, approximately 25 million individuals aged 60 and above reside at or below 250 percent of the federal poverty line.
However, for these seniors, the modest increases in prices fail to address the precarious financial circumstances they encounter.
Seniors encounter distinct economic hurdles compared to other demographic groups. Financial analysts note that they often allocate a larger proportion of their income towards healthcare and housing, both of which experienced greater price escalations than the overall inflation rate.
The inevitable rises in prescription drug expenses and rental costs disproportionately impact retirees, yet the adjustments made through Social Security’s COLA do not adequately reflect these challenges.
Read more: Navigating Social Security COLA: Tax Considerations For The Current Year
Social Security’s COLA Determination Challenges
Zack Hellman, owner of Tax Prep Tech, suggests using the consumer price index for the elderly (CPI-E) instead of the consumer price index for urban wage earners and clerical workers to more accurately gauge the inflation affecting seniors.
Additionally, the Social Security Administration faces challenges in determining an appropriate COLA due to variations in seniors’ experiences and living expenses across different regions of the country.
Seniors are expressing apprehension about the possibility of payment increases dropping to less than 2 percent in 2025.
The Senior Citizens League anticipates that seniors might receive a COLA of only 1.75 percent for 2025.
Although the exact adjustment won’t be confirmed until later in the year, many seniors are anxiously awaiting the outcome.
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