Inflation led to the highest cost-of-living adjustment in 40 years for Social Security recipients this year, with checks increasing 8.7%. But as inflation cools, the COLA rate could be less than half that next year.
Although it’s still too soon to know exactly what the 2024 adjustment will be — it’s based on inflation numbers from July, August and September of the previous year and announced in October — current projections put the rate at around 3.1%. It could be less generous than that, says Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens League.
“As there are still five more months of data to come out, my estimate will change,” Johnson says. luck. Long-term inflation remains on a downward trend. Thus, COLA can drop below 3.1%.”
The COLA affects about 70 million people who receive Social Security benefits, including seniors, disabled adults, insured worker survivors and low-income individuals receiving Supplemental Security Income (SSI).
As inflation has risen rapidly over the past few years, these 70 million beneficiaries received larger-than-normal adjustments in 2022, when the increase was 5.9%, and in 2023, with a four-decade high of 8.7%. Even if the adjustment hits 3.1% next year, that would still be higher than many years over the past decade (in 2021, the COLA was 1.3%; in 2020, it was 1.6%).
Inflation and a volatile stock market have hit the elderly — including both baby boomers and members of the silent generation — especially hard over the past few years. Some have had to make tough choices about what to pay because their budgets are so tight; Others have delayed retirement or returned to work to make ends meet.
But while inflation may be moderate, it is still higher than it was 20 years ago. And the Senior Citizens League (SCL) points out that many people with fixed incomes, especially the elderly, have already lost purchasing power over the past two decades. The longer a person receives benefits, the lower their purchasing power, as the losses accumulate each year. The organization also found that those who retired before 2000 lost 36% of their purchasing power.
According to the organization, Social Security benefits increased by 78% between January 2000 and February 2023, while the cost of goods and services that retirees typically purchase — including food, utilities, car maintenance, etc. — increased by 141.4%.
According to SCL, “For every $100 a retired family spent on groceries in the year 2000, that family could purchase only $64’s worth today.”