The Social Security COLA (cost-of-living adjustment) for 2024 is 3.2%, as you have undoubtedly already heard. Although it doesn’t sound like much, it is better than average. The average retired worker’s cheque will increase by $59 a month, while some will receive much larger increases. However, for many, this increase may not be sufficient to meet their needs for the upcoming year. We’ll look at why below, along with some actions elders can take if they’re having trouble making ends meet.
Social Security COLA
It makes it reasonable that the government bases Social Security COLAs on the inflation rate since the whole point of the program is to help seniors’ benefits keep up with growing expenses. It examines, more precisely, the percentage change in price information from the CPI-W (Consumer Price Index for Urban Wage Earners & Clerical Workers) during the third quarter. Here is the cost of a collection of standard items and services that a large number of today’s workers utilize. This seems logical on the surface, but then you find out that there is a Consumer Price Index for the Elderly (CPI-E), which many claim more accurately represents the spending patterns of seniors who are 62 years of age and older.
As per the Senior Citizens League, the average senior would have received an additional $3,787.80 in benefits over the last ten years if the government had utilized this information to determine Social Security COLAs instead. It was discovered that compared to the existing CPI-W technique, computing COLAs utilizing the CPI-E almost invariably produced a greater COLA. The Senior Citizens League estimates that since 2000, benefits from Social Security have lost around 36% of their purchasing power, and this trend is probably going to continue. There doesn’t seem to be much action on this subject at the moment, even though some in government are advocating for a modification to the COLA calculations.
Maximize Your Checks
The solvency situation facing Social Security could be one plausible explanation for this. The trust funds from Social Security will run out in 2034, according to the most recent projections. If the government doesn’t act to boost the program’s budget beyond this date, that will only be likely to pay out roughly 80% of the payments that are slated going ahead. Hence, even if using the CPI-E instead of the COLA will help seniors over the long run, this funding problem might get worse. For the time being, all we can do is wait and see how the authorities handle the solvency problems with Social Security and whether it modifies COLA computations at that point. It is the responsibility of each recipient to determine how to maximize their checks until that time.
Though many do not, seniors should ideally have a sizeable nest egg they may use to augment their Social Security benefits. For those who are still employed, their money from work will assist them to pay for their living expenses. For some families, cutting back on expenditure might be an option. However, if such options aren’t viable or adequate, you might need to look into other government benefits for which you might be eligible. Seniors should research Supplemental Security Income (SSI).
