Social Security Adjustments Prompt Financial Concerns for 2024
The Social Security adjustments for 2023 exceeded those from the start of the year, posting an 8.7% increase. However, 2024 only saw a rise of 3.2%, about $50 for most recipients. Though anticipated, this change has left beneficiaries feeling financially vulnerable as the cost of living continues to surge.
There has long been a debate about Social Security adjustments, with advocates arguing that the annual cost-of-living adjustment (COLA) doesn’t adequately reflect rising expenses, especially in areas like healthcare, food, and housing. In light of such relatively minor increases and a shifting economic climate, beneficiaries are urged to be prudent with their finances, prioritizing essential expenses and savings for emergencies.
The ongoing Social Security reform debate has been reinvigorated by these recent adjustments, fuelling discussions about the system’s long-term sustainability and the need for adequate support for the elderly and disabled. Despite some criticism, the Social Security Administration remains committed to these individuals and is planning various initiatives to address the issue.
The Senior Citizens League (TSCL) has altered its 2025 COLA outlook, increasing its estimate from 1.75% to 2.4% following the release of the latest Consumer Price Index (CPI) data. This forecast change is largely due to rising CPI, which assesses the price changes of consumer goods and services. However, this is merely an estimate, with the actual 2025 COLA determined by the Social Security Administration based on third-quarter data for that year.
While the increased forecast may alarm some retirees, it suggests that there may be higher Social Security benefits in the future, given that the COLA adjusts in response to inflation indicators such as the CPI. The TSCL continues to monitor these changes and advocates for legislation that protects and enhances Social Security beneficiaries’ purchasing power.
Given a steady inflation rate of 3.2%, the 2025 COLA estimate has been revised upward. But there are still challenges linked to unpredictable future economic conditions, and refinement of prediction models is necessary. Meanwhile, the Congressional Budget Office predicts a 2.5% rise in the 2025 COLA, indicating a deceleration compared to 2024’s increase.
The average increase in Social Security over a 20-year period has been 2.6%, surpassed by the increase in 2024. Changes to benefits or their calculation may be required due to changes in the economic landscape and uncertainties surrounding future financing. Beneficiaries are encouraged to diversify their income in retirement to reduce dependence on Social Security and remain vigilant about these changes as they directly affect their financial futures.
Despite adjustment, a TSCL survey showed that over 90% of respondents in 2023 saw their monthly expenses expand beyond the 2024 Social Security raise. A troubling trend of increasing expenses outstripping income was observed, prompting urgent calls for decisive action to ensure beneficiaries’ financial stability and well-being in retirement.
