Many retired people and people with disabilities depend on the Social Security Administration (SSA) to help them stay financially stable.
It makes sure that these groups get regular payments that help them pay for their basic needs. This way, they can keep up an acceptable standard of living when they retire or have a disability.
For people whose main or only source of income is Social Security benefits, this method is very important.
Through a process called Cost of Living Adjustment (COLA), Social Security payments are switched around every year.
The purpose of COLA is to help people who get it keep up with inflation by taking into account changes in the prices of things like food, housing, and medical care.
The goal is to make sure that those who get help do not fall behind as living costs go up. For instance, when prices of things like food and rent go up because of inflation, COLA gives people more money to help them pay for those costs.
But there are more and more worries about how well this change has worked in recent years and whether it will be enough to meet the needs of retirees in the future.
As of now, predictions point to a lower COLA for next year, which has some people worried. The planned rise is set to happen in January 2025, and the expected change is thought to be around 2.5%.
Most people think that any rise is a good thing, but this small percentage has a lot of retirees worried about whether it will be enough to meet their needs.
Many people depend on even small increases in their benefit payments to stay financially stable. However, some people are worried that the planned increases will not go far enough.
The impact of a lower COLA on Social Security benefits
Based on this estimate of 2.5%, the average monthly payment for retirees could go up to about $1,920, which is an extra $48 per month.
Some people may be glad about this rise, but others, especially those who have been through bigger COLA changes in the past, may think it is not enough.
Many retirees’ living costs are already going up faster than the yearly increases that Social Security gives them, which puts more strain on their finances.
This is a real worry, not just an idea. A poll by the Senior Citizens League, a nonpartisan group that works to improve the lives of seniors, showed that many retirees are having a hard time.
In particular, 69% of those who answered the poll said that their household costs had gone up more than the COLA they got the previous year.
This information shows that many seniors are already having a hard time with money, and it makes me worry that a lower COLA in 2025 could make things even worse.
The economy for retirees is getting more complicated. The COLA raise will help a little, but it might not be enough to stop the costs of important things like housing, food, and medical care from going up.
Alex Beene, a professor of financial literacy at the University of Tennessee at Martin, said that even though inflation has slowed down overall, the prices of things that seniors need to live have kept going up.
This means that retirees may not be able to buy as much, even though payments are going to go up. Especially the cost of health care keeps going up sharply, and for retirees, these costs can take up a big chunk of their monthly budget.
Because of these facts, there is more and more talk about whether the way COLA is calculated is still the right way to do it. At the moment, the change is based on a general consumer price index that measures inflation for the whole community.
But some experts say this might not really show how seniors spend their money and what they need. For example, older people often spend a bigger share of their income on housing and health care than the general population.
This makes them more vulnerable to price increases in these areas. Because of this, some people want to use a consumer price index that is especially made for seniors when figuring out COLA.
Also see:-New payments from $2,710 to $4,873 have been announced by Social Security for seniors aged 62 and up
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