In 2024, Social Security recipients will see a modest 3.2% increase in their benefits, a decline from last year’s record 8.7% bump. While this smaller increase may offer some relief, many beneficiaries are concerned about how it will cover rising expenses.
The New Numbers
Starting next year, 71 million Americans receiving Social Security will get an extra $59 a month, bringing the average monthly payout to $1,907. Last year saw a whopping 8.7% increase, the largest since 1981, which added an extra $140 to monthly payments.
The Social Security Administration adjusts payments annually based on inflation. On average, benefits have risen by 2.6% each year for the past two decades.
September’s inflation figures, which remained steady at 3.7%, will be the last considered before the Federal Reserve’s next meeting, influencing its policy decisions.
Retirees and their dependents constitute three-quarters of Social Security recipients. Disabled workers and low-income individuals also benefit from the program.
For many lower and middle-income retirees without workplace retirement plans like a 401(k), Social Security serves as a crucial financial lifeline.
This year’s modest increase disappoints many recipients, especially after last year’s substantial bump.
Annual bonuses often get offset by rising Medicare Part B premiums, which are automatically deducted from Social Security checks. These premiums are expected to rise by around $10 in 2024.
The current year’s inflation rate influences the next year’s increase, making it challenging for beneficiaries who have already endured high prices. Rising costs for essentials like gas, car insurance, and healthcare make even modest increases in Social Security critical for recipients.
Calls for Change
Cost-of-living adjustments are based on an average basket of goods for employed individuals, not retirees, who often have different spending patterns. Advocates suggest switching to a Consumer Price Index for the Elderly (CPI-E) to better reflect retirees’ expenses.
Social Security’s cost-of-living adjustment is not a benefit increase but rather a measure to help seniors maintain their standard of living.
As beneficiaries anticipate this modest increase, they remain concerned about how it will cover their living expenses, particularly in healthcare and housing.
While the 3.2% hike offers some relief, it emphasizes the need for a more comprehensive look at how Social Security can adequately serve an aging population facing a wide array of increasing expenses.
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