Unless the U.S. inflation rate registers a massive and unexpected spike for August and September 2023, next year’s Social Security cost-of-living adjustment will almost certainly be around 3.0% — well down from this year’s 8.7% COLA. The lower estimated COLA is due to rapidly declining inflation in 2023.
But while lower inflation is good news for most consumers, many seniors say they are still paying higher prices for household essentials — and they could be squeezed even further in 2024 with a much lower COLA..
A COLA of 3.0% would raise the average monthly benefit in 2024 by about $53.60 from current levels — a big drop from this year’s average increase of $146 a month. This could prove problematic for Social Security recipients if the prices of essential items like food, housing and healthcare continue to rise at a faster rate than overall inflation.
A new survey from The Senior Citizens League (TSCL), a non-partisan seniors advocacy group, found that most older Americans continue to face “persistently high” prices that still affect their household budgets.
Although Social Security recipients received their highest COLA in more than four decades with this year’s 8.7% annual adjustment, nearly eight in 10 retirees polled by The Senior Citizens League report that “lingering high prices” continue to have a major financial impact.
Below are some highlights from TSCL’s most recent Retirement Survey of 1,759 seniors, conducted in July:
- 79% of respondents said monthly budgets for essential items such as housing, food and prescription drugs are higher than this time a year ago.
- 9% said it was about the same
- 7% said it was lower
- 5% were uncertain
Nearly two-thirds of respondents (66%) said they postponed or went without dental services/products due to high prices, while 43% said they delayed getting optical exams or prescription eyeglasses. Nearly one-third said they have postponed getting medical care or filling prescriptions because of high deductibles, out-of-pocket costs and unexpected bills.
Meanwhile, bigger monthly Social Security payments due to historically high COLAs in 2022 (5.9%) and 2023 (8.7%) mean many retirees were pushed into a higher tax bracket. Nearly one-quarter of those surveyed had to pay federal income taxes on a portion of their Social Security benefits this past tax season. That percentage is likely to rise for the 2024 tax season, which will put even more financial pressure on seniors.
The exact COLA for 2024 won’t be known until Oct. 12 when the September inflation numbers come out. The Social Security Administration bases its annual COLA calculation on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter compared with the prior year.
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