Seniors said the modest cost-of-living bump in Social Security benefits this year won't be enough to cover the lingering impact high inflation has had on their finances, according to a recent survey.
Nearly three in five seniors collecting Social Security are struggling financially and 62% said the 3.2% cost-of-living adjustment (COLA) for 2024 is insufficient to cover their expenses and support their lifestyle, the Atticus survey said. Roughly 40% said they planned to find work due to the modest COLA increase, with almost half of single seniors (47%) considering employment to supplement their income.
In January, more than 71 million seniors receiving Social Security benefits will get a COLA of 3.2%, averaging roughly $59 extra each month. Increased payments to approximately 7.5 million SSI recipients will begin on December 29, 2023. The adjustment is lower than in previous years because of moderating inflation. Recipients received increases of 8.7% for 2023 and 5.9% for 2022, which were the largest increases since the early 1980s due to record-high inflation.
"The 2024 COLA increase has illuminated significant financial stress among seniors collecting Social Security, highlighting the widening gap between Social Security benefits and the rising cost of living," Atticus said in its report. "These statistics and personal accounts point to a pressing need for more robust measures to support the elderly, especially those who are single or contemplating rejoining the workforce. As seniors navigate these economic challenges, addressing their financial security requires a comprehensive reevaluation of how we support our aging population."
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Taxes and Medicare expenses eat away at COLA
As many as 26% of survey participants who have received Social Security for more than three years report they paid taxes on a portion of their benefits for the first time during the 2023 tax season, The Senior Citizens League (TSCL) said in a survey. An even greater percentage will likely pay taxes on their benefits in 2024 because of a significant COLA increase in 2023.
"Up to 85% of Social Security benefits can be taxable when income exceeds certain thresholds," TSCL said. "Unlike other parts of the federal income tax code, the income thresholds that subject Social Security benefits to taxation have never been adjusted for inflation. Consequently, as Social Security income increases due to COLAs, that can bump more retirees into the thresholds that triggers the tax on their Social Security benefits."
Also rising is the standard monthly cost of Medicare Part B, which most seniors and disabled people have to cover certain doctors' services, outpatient care, medical supplies, and preventive services, will increase by $9.80, or 6%, to $174.70, the Centers for Medicare and Medicaid Services (CMS). The annual deductible for Medicare Part B beneficiaries will rise by $14 to $240 in 2024. The Medicare Part A inpatient hospital deductible beneficiaries pay if admitted to the hospital will be $1,632 in 2024, an increase of $32 from 2023.
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Non-retirees more optimistic about Social Security's future
A growing number of working Americans expect to receive Social Security when they retire, according to a recent Gallup survey.
Half of the respondents expect the Social Security system to pay them a benefit when they retire, while 47% do not, the survey said. In three prior readings from 2005 and 2015, non-retirees were more inclined to predict they would not receive Social Security retirement benefits. Moreover, 53% of current U.S. retirees believe they will continue to receive their full Social Security benefits, up from 37% in 2010 and 49% in 2015.
The improvement comes despite projections that show Social Security benefits could be cut by 20% as soon as 2034 if no changes are made to the system, according to the annual trustees' report recently released by the Treasury. In 2034, the system is projected to be able to pay 80% of benefits to recipients.
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