Social Security Payment Increase Could Drop Significantly in 2024: Seniors Group
A nonpartisan seniors group warned that next year’s cost-of-living adjustment (COLA) for recipients will likely be smaller in 2024 than in 2023, meaning retirees will lose purchasing power.
In a news release, The Senior Citizens League said that the COLA for 2024 could be approximately 3.1 percent for 2024, or down more than 5 percentage points from 2023’s COLA, which was 8.7. percent. The increase was the largest in more than 40 years due to high inflation amidst the winding down of COVID-19-related pandemic rules and lockdowns.
The group said that because of a likely decrease in inflation, there will be a smaller COLA adjustment. Inflation has been decreasing as the Federal Reserve has sharply raised interest rates over the past year or so, although Labor Department data shows that last month’s Consumer Price Index—a measure of inflation—stood at 4.9 percent year-over-year.
“Inflation is moderating, but a lower inflation rate has not necessarily meant that prices have decreased,” the Senior Citizens League wrote in a new study, adding that some “key items” have “stubbornly high” prices.
The COLA is determined annually during the month of October by the Social Security Administration, basing the adjustment on the percentage increase in the Consumer Price Index in the third quarter of that year. If there is no change, then no adjustment will be made.
“Based on February inflation data, the [FY 2024] COLA looks like it will be below 3 percent and could fall into the 2 percent or even lower range by the third quarter if that 12-month average continues to decline,” Mary Johnson, the Social Security and Medicare policy analyst at the Senior Citizens League, told CBS News in a recent statement.
The group noted that Social Security beneficiaries’ purchasing power has diminished greatly—or about 40 percent—since the year 2000. “That was the deepest loss in buying power since the start of this study in 2010. This year the study found that the loss of buying power slightly improved—by four percentage points—to 36 percent. However, that is still one of the deepest losses recorded by this study, exceeded only by the loss in 2022,” it said.
Johnson also noted that seniors have different spending habits than other groups and are more likely to purchase prescription drugs, dental services, and other medical expenses—some of which are not covered by Medicare. She told The Hill that the Consumer Price Index does not necessarily reflect the rising cost of those items and services.
Seniors “are spending a bigger percentage of their household budgets [on these expenses]. These costs are not showing up, necessarily, in the COLA. There’s a weakness in the COLA,” Johnson told the outlet, while noting the diminished change in purchasing power over the past two decades or so.
But regarding the COLA increase or decrease, “It’s not like we have a target number we were hoping for,” Johnson told The Hill. Instead, her group wants “to see an approach that’s more comprehensive than that,” she said, adding: “People are also living longer lives in retirement, so it’s hard for anyone to save for that.”
The seniors group also weighed in on the recent congressional battle over the debt ceiling as Treasury Secretary Janet Yellen has repeatedly warned that the United States may default on its obligations in the coming weeks. Certain spending cuts have already been implemented to offset a possible default, she has said.
“Beneficiaries are legally entitled to full scheduled benefits under the Social Security Act,” the organization said in its release. “But according to a recent issue brief from the Congressional Research Service, another law, the Antideficiency Act, prohibits government spending in excess of the available funds.”
According to data from the Social Security Administration, the agency makes about $1 trillion in benefits payments during the year to approximately 67 million people—the majority being retirees. Some 48.6 million recipients are retired, while 7.6 million are disabled workers, and another 9.8 million recipients are survivors and dependents.
It noted that the Social Security Administration “would not have the legal authority to pay Social Security benefits in full or on time should the trust funds fall short due to a delay in an agreement over the debt limit,” according to the release. “No law provides the specific actions the SSA must take to ensure that Social Security benefits are paid in full and on time.”
It came as Yellen recently warned that Social Security and Medicare may suffer as a result during a recent interview.
“Treasury [could find] itself in the position where we’re unable to pay all of the bills that come due that day. And this would be really the first time in the history of America that we would fail to make payments that are due,” Yellen told ABC News earlier in May. “And, you know, whether it’s defaulting on interest payments that are due on the debt or payments due for Social Security recipients or to Medicare providers, we would simply not have enough cash to meet all of our obligations.”
