While Social Security is set to increase by 3.2 percent in 2024, many seniors are worried about how the limited inflation adjustment will keep them afloat.
In a new report from Atticus, a majority of seniors voiced dissatisfaction with the cost-of-living adjustment (COLA) for 2024. In total, 62 percent of the 400 Americans over the age of 62 in the survey said they were unhappy with the payment bump.
"About that 3.2 percent COLA increase for 2024, well, it sounds good on paper, but, honestly, it's not quite cutting it for seniors," Christopher Hensley, financial adviser and the president of Houston First Financial Group, told Newsweek.
The concerns are growing, as nearly three in five seniors said they were struggling financially, and 70 percent of single seniors already struggle with their existing Social Security income.
The ramifications of the small COLA boost could be severe, with around two in five seniors saying they plan to seek employment due to the modest increase. For single seniors specifically, 47 percent said they would consider employment to supplement their incomes.
"While the 3.2 percent adjustment acknowledges inflation, it's insufficient against the rise in all essential living costs such as utilities, healthcare and food," Hannah Workman, member of the creative team for Atticus, told Newsweek. "The need for nearly 40 percent of seniors to consider employment underscores the disconnect between the COLA increase and the reality of seniors' expenses."
Hensley said the consumer price index (CPI) doesn't fully reflect the reality of older adults. A better measure, the CPI-E (for the elderly) reflects what people age 62 and older spend their money on.
"It's a big deal because things like healthcare, which, let me tell you, can be a major expense, weigh more in the CPI-E," Hensley said. "Seniors often end up spending way more on healthcare than younger people, and those costs just keep climbing as they get older."
"So, when the COLA is based on that, it doesn't really match up with the real-life financial squeeze they're feeling, especially with healthcare costs, which seem to be always on the rise," Hensley added. "This mismatch has some serious consequences."
A large number of seniors rely on Social Security for the bulk of their retirement income, so making sure the payments keep up with inflation is vital for their survival, said Drew Powers, founder of Powers Financial Group and a registered investment adviser.
"Seniors tend to spend more on medical care, the costs of which typically increase more than the general inflation rate," Powers told Newsweek. "This year's decrease in gasoline prices plays a big part in the overall lower inflation numbers, but seniors do not spend as much on gasoline as the younger generations who may be commuting and shuttling kids to their activities."
Seniors typically face dire effects of inflation when it comes to their everyday grocery expenses, which the COLA increase might not fully reflect.
In the most extreme cases, the modest COLA bump could cause some seniors to delay retirement altogether.
But Drew Stevens, international financial educator for individuals seeking to optimize their retirements, said this reflects an ongoing need for retirees to plan sooner rather than later.
"America is approaching a dangerous path where the point next year when more than 12,000 people will start turning 65 each day and for many, approximately 40 percent will rely on Social Security as a main income source," Stevens told Newsweek. "The reason why seniors are annoyed is that they believe Social Security should bail them out of financial hardship when saving for retirement should have been a priority and now mortality is hitting them hard."
Still, seniors themselves feel the system, which routinely adjusts payments based on inflation numbers, doesn't fully encapsulate the current economic environment.
"I find the 3.2 percent COLA increase deeply concerning and inadequate," Dmitriy Shelepin, CEO of SEO of agency Miromind and a senior on Social Security, told Newsweek. "It's a slap in the face to those who dedicated their lives to building our society and deserve a dignified retirement."
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Suzanne Blake is a Newsweek reporter based in New York. Her focus is reporting on consumer and social trends, spanning ... Read more
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