The SSA revealed this month the modifications the program will undergo until 2024, which includes the new COLA. The amount of your payments every month will be directly impacted by the COLA in particular. You should anticipate receiving more money the following year the larger the adjustment. The 2024 COLA has some positive news, but it also has some unnoticed negative news that could overshadow it.
Anticipated Social Security Benefits 2024
According to the SSA, retirees can anticipate receiving a 3.2% COLA in 2024, which translates to an additional $59 every month for the typical retiree. Given that this year’s 3.2% COLA is far less than last year’s staggering 8.7% increase, some folks could be unhappy. A smaller COLA indicates that inflation hasn’t increased as much this year as it did last year, though, as these changes are meant to assist payments in keeping up with inflation. In the end, retirees will probably benefit more from reduced inflation than from higher COLAs, so this is a welcome development for older folks, particularly those with little resources.
Even though most years’ COLAs are given to beneficiaries, Social Security has nevertheless had trouble keeping up with growing inflation. As per a 2022 analysis by The Senior Citizens League, benefits have experienced a reduction of almost 40% in their purchasing power since 2000. Stated differently, although the goal of COLAs is to support benefits in preserving their purchasing power, they haven’t been able to do so in recent years. Even though the COLA for 2019 will be lower than in 2020, retirees’ ability to make ends meet on Social Security is still getting harder.
Lessen Your Reliance On Social Security COLA
Social Security may become even less dependable in the future if this pattern continues. This decline in buying power may make your retirement less affordable for people who rely largely on their benefits to get by. You may not be able to change the problems with Social Security or next year’s COLA, but you can make efforts to lessen your reliance on your benefits. Increasing your savings is arguably the most excellent thing you can do if you haven’t retired yet. Saving even a tiny bit extra can make a big difference, even if you are unable to make investments much.
Let’s take an example where you can afford to add $100 every month to your retirement savings account. If the average yearly return on your assets is a modest 7%, your savings after 15 years might total about $32,000. Even though that might not be enough to live on in retirement, those savings would cover more than a year’s worth of payments given that the average retired employee receives about $22,000 in benefits from Social Security each year. When you’re retiring and on a fixed income, saving money is more difficult. Even if you can’t always grow your nest egg in this kind of situation, it can be worth contemplating temporarily returning to work if you’re concerned about building up your retirement fund.
Have An Extra Job For Safety
Having additional income from a job can help you save some additional money in your retirement account in addition to lowering the amount you currently rely on Social Security. Although it might not seem like the best choice, extending your career by one or two years could significantly improve your retirement’s financial security. The revised COLA will result in slightly higher payouts for beneficiaries starting in 2024. Benefits might not last as long as they once did, though. You can lessen your reliance on Social Security benefits and feel more secure about your retirement by beginning to save more or spending a few more years.