Due to a decrease in inflation rates, Social Security beneficiaries are likely to receive a smaller cost-of-living adjustment (COLA) next year. The Senior Citizens League, an organization that advocates for issues affecting elderly Americans, projected a 3% increase based on March’s inflation figures. The Consumer Price Index rose by only 0.2% from the previous month and is up 5% from the previous year, marking the slowest pace since May 2021.
The Social Security yearly adjustment is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which only increased by 4.5% in the past year. If beneficiaries were to receive a 3% increase in their monthly payments next year, it would represent a substantial drop from the 8.7% increase awarded in 2023, the largest in forty years.
The Social Security Administration will announce the definitive adjustment percentage in October
A boost of that size would elevate the average retired individual’s benefit, which stands at $1,827, by approximately $54 each month. The Social Security Administration will announce the definitive adjustment percentage in October. It’s probable that the COLA for 2024 will be under 3%. While a decrease in inflation could ease the burden for elderly individuals, a fresh survey by The Senior Citizens League revealed that the significant inflation spike has left many older households with enduring financial difficulties, which can impede recovery.
From January 2021 to December 2022, the typical Social Security payment was $1,054 lower than high inflation levels overall. The Senior Citizens League’s analysis reveals that this year’s 8.7% increase in benefits has surpassed the actual inflation rate each month by roughly 2.6%, which equates to around $44.90 monthly. Nonetheless, the average payment has only recovered $179.40 since the start of the year, and that’s without considering the Medicare Part B premium deduction.
The current standard Part B premium for this year amounts to $164.90, a decrease from the $170.10 rate in 2022. The Senior Citizens League has urged Congress to pass legislation that would tie the adjustment to an inflation measure for seniors, such as the Consumer Price Index for the Elderly (CPI-E). Unlike the CPI-W, the CPI-E tracks the expenditures of households whose members are 62 years old and above and takes into account their healthcare expenses and Medicare premiums. According to Johnson, an inflation metric that doesn’t accurately measure healthcare expenses tends to underestimate the actual inflation rate and give Social Security beneficiaries less than what they are entitled to receive through the COLA.