America’s 71 million Social Security recipients will get an extra $59 a month starting next year after officials confirmed payments would rise 3.2 percent.
The increase is a sharp drop from last year’s record-setting 8.7 percent that was pushed up by rampant inflation.
Each year, the Social Security Administration makes cost-of-living adjustments (COLA) to the benefit determined by inflation. The benefit has increased by an average of 2.6 percent each year over the past 20 years.
But this year’s slightly higher bonus means the average retired worker can expect to earn $1,907 a month starting in January, up from $1,848.
Jo Ann Jenkins, CEO of the American Association of Retired Persons (AARP), said: ‘Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up keep up with rising prices.
America’s 71 million Social Security recipients will get an extra $59 a month starting next year after officials confirmed payments would rise 3.2 percent
Retirees and their dependents make up three-quarters of all Social Security recipients, but millions of other beneficiaries, including disabled workers and low-income people, will also receive the increase
“We know older Americans still feel the pinch when buying groceries and gas, making every dollar count.”
Retirees and their dependents make up three-quarters of all Social Security recipients, but millions of other beneficiaries, including disabled workers and low-income people, will also receive the increase.
The payments are seen as a lifeline for lower- and middle-income retirees, many of whom have never had workplace retirement accounts like a 401(K).
And they have the added benefit of annual COLAs that help senior citizens keep up with the rising costs of housing, food and medical care. By comparison, a 401(K) sees its value eroded by inflation over time.
But this year’s bonus will no doubt come as a disappointment to retirees after last year’s bumper increase of 8.7 percent – the highest increase since 1981.
This meant that recipients earned an extra $140 per month this year compared to 2022.
Each year, the bonus is often swallowed up by increasing Medicare Part B premiums that cover doctor visits and outpatient hospital services. They are automatically deducted from Social Security checks.
The Medicare Board of Trustees has predicted that premiums will rise by about $10 in 2024, from $164.90 to $178.80.
The program has often been criticized because annual COLAs for the following year are calculated using the current year’s inflation rate.
This means that the boost comes after retirees have already buckled under the weight of high prices.
Moreover, adjustments are based on the average basket of goods and services taken by people in employment rather than retirees, who typically spend more on housing and health care.
Campaigners called for the COLA to be calculated using another experimental measure called the Consumer Price Index for the Elderly, or CPI-E., which assesses the goods purchased by those 62 and older.
Mary Johnson, an analyst with the advocacy group Senior Citizens League, told the New York Times: ‘If it were the law today, the COLA would be higher in 2024.’
Annual inflation held steady in September, with prices rising 3.7 percent from a year earlier, thanks mainly to the cost of food and energy. Data shows how standard grocery items rose in price between August and September
Meanwhile, Nancy Altman, executive director of Social Security Works, said in a statement: ‘The cost-of-living adjustment is an extremely important feature of Social Security.
‘But people shouldn’t think of this as an increase – it’s meant to make sure that seniors and people with disabilities can tread water, and stay above the surface, because without it they would drown.’
The announcement comes after data from the US Bureau of Labor Statistics showed inflation rose 0.4 percent in September.
However, the annual rate held steady at 3.7 percent, unchanged from August.
Gas, hotels, car insurance and new vehicles increased by 2.1, 4.2, 1.3 and 0.3 percent respectively month on month. Health insurance used cars fell 3.5 and 2.5 percent.
The September inflation figures are the last before the Fed meets on November 1 and revises its benchmark interest rates again. So they will help shape the Federal Reserve’s next policy steps.