Social Security payments have increased by 3.2 percent in 2024 courtesy of the yearly cost-of-living adjustment. But many seniors are complaining this is not anywhere close to covering the price hikes they’re experiencing across sectors.
Every year, the Social Security Administration updates its Social Security payments to keep in line with inflation through the cost-of-living adjustment (COLA).
In 2023, the COLA reached one of the highest bumps in history, at 8.7 percent, but in 2024, that increase came down to just 3.2 percent. That amounts to roughly a bit more than a $50 increase each month.
Since then, many have complained that the Social Security payments don’t actually help seniors afford the rising prices they see on everything from groceries and gas to housing.
CHANDAN KHANNA/AFP via Getty Images
“It never really keeps up when seniors need it most, which is right now,” Brandon Selfors, the CEO of life settlement and Medicare insurance company Bridge, told Newsweek. “My hunch is that senior poverty will continue to rise.”
Currently, around 25 million Americans over 60 live at or below 250 percent of the federal poverty line, according to the National Council on Aging. And for these seniors, the moderate price bumps don’t make up for the financially precarious situation they find themselves in.
Seniors face different economic challenges than other demographic subsets. They tend to spend a larger portion of their income on health care and housing, which both saw higher price upticks than the general inflation rate, finance experts say.
Prescription drug cost increases and higher rents inevitably will hit retirees more, and Social Security’s COLA doesn’t necessarily show this.
“While the adjustment may match or even exceed the national inflation rate on paper, the devil is in the details,” PRM certified financial adviser Roksolana Ponomarenko told Newsweek.
The consumer price index for urban wage earners and clerical workers is used to calculate the COLA, but some propose that the consumer price index for the elderly (CPI-E) would be a better fit to fully evaluate the inflation seniors are facing, Zack Hellman, the owner of Tax Prep Tech, said.
“Adopting the CPI-E for COLA calculations could provide a more accurate reflection of the inflation experienced by seniors, potentially leading to higher adjustments that better match their cost increases,” Hellman told Newsweek. “Establishing a minimum COLA, regardless of inflation rates, could help ensure that Social Security benefits do not lose purchasing power over time, especially in years of low inflation.”
It’s also difficult for the Social Security Administration to adopt an accurate COLA because of the diverse experience and budgets of seniors across the country. While one senior living in a small Southern town might be facing minimal rent and food price hikes, those living in urban areas could be far more disadvantaged.
“This geographical disparity means that a one-size-fits-all approach to COLA falls short, leaving many seniors to pinch pennies to make ends meet,” Ponomarenko said.
Seniors are already concerned looking ahead to 2025 that payment increases might dwindle to below 2 percent.
The Seniors Citizen League predicted seniors could only see a COLA of 1.75 percent for 2025. While the real adjustment won’t be known until later this year, many seniors are waiting with bated breath.
The true 2025 COLA will reflect the average rate of inflation for July, August and September of this year, so they must wait a few months to see how payments play out.
Is Social Security enough to pay for necessities in the current economy? Newsweek wants to hear from you. Contact us at [email protected].
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.