Home Personal Finance Social Security COLA to drop significantly in 2024, senior group predicts

Social Security COLA to drop significantly in 2024, senior group predicts

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(NEXSTAR) – Social Security beneficiaries should not expect the 2024 Cost of Living Adjustment (COLA) to be as large as in 2023, despite warnings that beneficiaries are losing purchasing power.

“The 2024 COLA could be around 3.1%,” said Mary Johnson, a Social Security and Medicare policy analyst at the Alliance for Senior Citizens. news release Published last week.

Over the years, the Alliance for Senior Citizens (TSCL), a nonpartisan advocacy group for older people, has used data from the Bureau of Labor Statistics, particularly the Consumer Price Index (the same data ultimately used by Social Security). Based on the data, we have made predictions for future COLA increases. An administrator determines her annual COLA increment.

The 8.7% increase in COLA in 2023 is the largest COLA increase in more than 40 years, partly due to supply chain disruptions that caused inflation to skyrocket during the pandemic. However, TSCL analysts worry that a moderation in inflation, or at least signs of a moderation in inflation, could reduce COLA growth in 2024, hurting beneficiaries. .

“Although inflation is moderating, lower inflation does not necessarily mean lower prices,” TSCL wrote. the study In the paper, published earlier this month, the group argues that prices for “main items” remain “stubbornly high.”

In an interview with Nexstar ahead of last year’s COLA announcement, Johnson said older people have different spending habits than younger generations. He said the CPI does not accurately reflect the rising costs of items that older Americans spend more frequently, such as prescription drugs, food, housing and dental services (generally not covered by Medicare). Stated.

“[Seniors] spends a larger proportion of the household budget [on these expenses]’ said Johnson. “Those costs are not necessarily reflected in his COLA. COLA has its weaknesses.”

TSCL’s latest study of benefit increases over the past 20 years also appears to show that older people’s ability to cope with rising prices has declined significantly. According to TSCL, Social Security benefits have lost about one-third of their purchasing power since 2000. Even considering all COLA increases over the last 22 years.

“For every $100 spent on groceries by households retiring in 2000, that household can now afford only about $64 worth,” TSCL writes.

TSCL’s forecast of a 3.1% increase in COLA in 2024 is, of course, subject to change. The official COLA won’t be announced until October and will come into force in January. However, TSCL believes that even the increase is probably not enough to meet the needs of the elderly.

“We don’t have the target numbers we were hoping for. We would like to see a more comprehensive approach than that,” Johnson said, pointing to the many economic issues facing current and future beneficiaries. However, he pointed out that this includes the possibility of the collapse of social security and the fact that there are fewer jobs to provide pensions to supplement social security. security check.

“People are also living longer in retirement, so it’s hard for everyone to save for it,” she says.

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