Social Security recipients, brace yourselves for the Biden administration’s disappointing cost of living update.
Prepare for Disappointing Cost-of-Living Update: Social Security Recipients Brace for Biden Administration’s Announcement
Looking ahead to retirement next spring, Karla Abbott finds comfort in the cost-of-living increase that millions of Social Security recipients get each year. But with consumer prices easing, the new boost will be far lower than this year’s 8.7%.
Analysts estimate the adjustment for 2024 will be around 3.2%.
After working 38 years as a nurse, the 61 years-old Sioux Falls, South Dakota, resident says she’s been saving for retirement since she was 18. But she isn’t certain that it will be enough, even with her Social Security benefits.
Still, she said Social Security’s annual cost-of-living increases provide some support as she and her husband plan out their non-working years.
“The increases will be helpful, certainly to those of us who are still doing the math on retirement,” she said.
Stressed Finances and Uncertain Future
Every year the agency adjusts its benefits, based on inflation. The 2024 Social Security cost of living increase — or COLA — is to be announced on Thursday.
The program pays roughly $1.4 trillion in benefits to more than 71 million people each year, including low-income individuals with disabilities.
Charles Blahous, a former Social Security trustee, said the annual COLA announcement is a reminder about the program’s stressed finances.
“This is an important system, and we need to restore its solvency, because if lawmakers can’t do that, then Social Security and its basic financing design would have to be abandoned,” he said.
The annual Social Security and Medicare trustees report released in March said the program’s trust fund will be unable to pay full benefits beginning in 2033. If the trust fund is depleted, the government will be able to pay only 77% of scheduled benefits, the report said.
The COLA is calculated according to the Bureau of Labor Statistics’ Consumer Price Index, but there are calls to use a different index — and for the agency to instead use the CPI-E, which is the index that measures price changes based on the spending patterns of the elderly — like health care, food and medicine costs.
Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, says her organization supports the Social Security Administration using whichever index is higher to best protect older people from inflation.
Any change to the calculation would require congressional approval. But with decades of inaction on Social Security and with the House at a standstill after the ouster of Speaker Kevin McCarthy, seniors and their advocates say they don’t have confidence any sort of change will be approved soon.
“I feel like there’s a lot of distraction in Washington,” Abbott said. “Does anyone even care about what is happening with Social Security? I have no clue why they can’t come together on something so important.”
The cost of living increases have a big impact for people like Alfred Mason, an 83-year-old Louisiana resident. Mason said that “any increase is welcomed, because it sustains us for what we are going through.”
As inflation is still high, he said anything added to his income “would be greatly appreciated.”
Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.
There have been legislative proposals to shore up Social Security, but they have not made it past committee hearings.
Jo Ann Jenkins, CEO of the AARP, said the organization “is urging Congress to work in a bipartisan way to keep Social Security strong and to provide American workers and retirees with a long-term solution that both current and future retirees can count on.”
“Americans work hard to earn their Social Security, and it’s only fair for them to get the money they deserve.”
Johnson, the Senior Citizens League’s analyst, said Congress “does not have any record of successfully and timely making changes to Social Security,” and when there were reforms to the program in 1983 — “we were far less divided.”
“Certainly the situation today is so contentious, simply getting there now is a huge effort.”
The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.
The post Social Security Recipients Should Prepare for Biden Admin’s Cost of Living Update – It’s Not Great appeared first on The Western Journal.
What are the concerns among retirees regarding the lower cost-of-living adjustment (COLA) for Social Security recipients in 2024?
Such an important issue.”
The Impact of a Lower COLA
The announcement of a lower cost-of-living adjustment (COLA) for Social Security recipients in 2024 has sparked concerns among retirees. With the estimate being around 3.2%, compared to this year’s 8.7%, many worry about their financial stability in retirement.
Karla Abbott, a 61-year-old nurse who has been saving for retirement since she was 18, expressed her uncertainty about whether her savings and Social Security benefits will be enough. While the annual COLA provides some support, Abbott acknowledges the need for careful financial planning during her non-working years.
Social Security’s annual COLA adjustment is based on inflation, and the upcoming announcement serves as a reminder of the program’s stressed finances. Charles Blahous, a former Social Security trustee, stressed the importance of restoring the program’s solvency to prevent its abandonment. The annual Social Security and Medicare trustees report released in March highlighted the trust fund’s depletion by 2033 and the potential reduction in benefits to 77% if no action is taken.
One aspect of the COLA calculation that has come under scrutiny is the use of the Consumer Price Index (CPI) to measure price changes. Some advocate for using the CPI-E, which focuses on the spending patterns of the elderly, including healthcare and food costs. Mary Johnson, a Social Security and Medicare policy analyst, supports using the higher index to better protect retirees from inflation.
However, any changes to the COLA calculation would require congressional approval. Given the inaction on Social Security reform and the current political landscape, seniors and their advocates are skeptical that any significant changes will be approved soon.
Abbott voiced her frustration with the lack of attention given to Social Security issues in Washington. She questioned whether policymakers truly care about the well-being of retirees and emphasized the need for action on this critical matter.
As the Biden administration prepares to announce the cost-of-living adjustment for Social Security recipients, anticipation mixed with concern fills the minds of millions of retirees. With consumer prices easing, experts estimate that the adjustment for 2024 will be around 3.2%, a significant drop from this year’s 8.7% increase.
For individuals like Karla Abbott in Sioux Falls, South Dakota, who have spent decades working and saving for retirement, the upcoming announcement raises questions about financial security in their later years. Despite her diligent savings and Social Security benefits, Abbott acknowledges that the annual cost-of-living increases play a crucial role in her retirement planning.
Every year, the Social Security Administration adjusts benefits based on inflation. However, this adjustment serves as a reminder of the program’s stressed finances. Charles Blahous, a former Social Security trustee, emphasizes the urgent need to restore the program’s solvency to avoid its abandonment. The annual Social Security and Medicare trustees report released earlier this year warned that the trust fund would be unable to pay full benefits starting in 2033, potentially leaving retirees with only 77% of their scheduled benefits.
The method for calculating the cost-of-living adjustment has also come under scrutiny. Currently, the adjustment uses the Consumer Price Index (CPI) to measure price changes. Some advocates argue that the CPI-E, which considers the spending patterns of the elderly and includes expenses like healthcare and food, should be used instead. Mary Johnson, a policy analyst at the Senior Citizens League, supports this change as a means to protect older individuals from inflation.
However, any modification to the calculation method would require approval from Congress. Given the long-standing inaction on Social Security reform and the current political climate, the likelihood of significant changes being approved in the near future remains uncertain.
Abbott, like many other retirees, expresses frustration and concern over the lack of attention given to Social Security issues in Washington. She questions
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