(NEXSTAR) — Social Security recipients shouldn’t expect the 2024 cost-of-living adjustment (COLA) to be as big as 2023, despite warnings that beneficiaries are losing their purchasing power.
“The 2024 COLA could be about 3.1%,” Marie Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, said in a press release last week.
The Senior Citizens League (TSCL), a high-profile, nonpartisan advocacy group, has for years based its estimates of upcoming COLA increases on data from the Bureau of Labor Statistics and specifically Consumer Price Indices—the same data the Social Security administration uses to ultimately determine increases. Annual at COLA.
The increase in 2023, of 8.7%, was the largest increase in the inflation rate globally in more than four decades, thanks in part to supply chain disruptions that have sent inflation soaring amid the pandemic. But analysts at TSCL worry that cooling inflation — or at least the emergence of cold inflation — will lead to a smaller 2024 COLA surge that could have adverse effects on beneficiaries.
“Inflation is moderate, but a low inflation rate does not necessarily mean that prices have fallen,” TSCL wrote in a study published earlier this month in which the group argues that “key items” remain at “stubbornly high” prices.
Johnson, who spoke with Nexstar before last year’s COLA announcement, said older people have different spending habits than younger generations. She said the CPI does not accurately reflect the rising costs of items that older Americans spend their money on most frequently, including prescription drugs, food, housing, or dental services (which Medicare generally does not cover).
“[Seniors] They spend a larger percentage of their family budget [on these expenses]Johnson said. “These costs do not necessarily show up in COLA. There is a weakness in COLA.”
TSCL’s latest study of benefit increases over the past two decades also appears to show a significant decline in the ability of seniors to keep up with rising prices: Social Security benefits, according to TSCL, have lost about a third of their purchasing power since 2000, even when accounting for each increase in COLA for the past 22 years.
“For every $100 a retired family spent on groceries in the year 2000, that family can buy only $64 worth of food today,” TSCL writes.
Of course, TSCL’s forecast of a 3.1% increase in COLA in 2024 is subject to change. The official COLA won’t be announced until October before it goes into effect in January. But whatever the increase, it will probably not be enough to meet the needs of the elderly, TSCL believes.
“It’s not like we had the target number that we had hoped for,” said Johnson, who pointed to a number of economic issues facing current and future beneficiaries — including the possibility of Social Security bankruptcy, and the fact that fewer jobs are now offering Social Supplemental Pensions. Inspection security.
“People also live longer in retirement, so it’s hard for anyone to save for that,” she said.
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