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We’ve had a few weeks to digest the 2024 Social Security cost-of-living adjustment (COLA), which came in at 3.2%. For some, it’s a disappointment after the 8.7% increase beneficiaries saw last year. But it’s actually quite a bit higher than the average COLA over the past few decades.

Still, you’re not alone if you’d hoped for a little more cash to cover your expenses in 2024. Many seniors don’t feel that Social Security COLAs do enough. Below, we’ll look at why, and what could be done to change that.

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How Social Security COLAs work

The Social Security Administration bases its COLAs on the difference in third-quarter inflation data between the current year and the previous year. To do this, it adds up the figures for July, August, and September in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and divides them each by three to get the average for each quarter. Then, it divides this year’s figure by the previous year’s figure to get the percent increase.

The difference between the averages from 2023 and 2022 was 3.2%, so we have a 3.2% COLA for 2024. This is higher than the average 2.6% COLA over the last several decades, and it should boost the average senior’s check by about $59 per month.

But some, including the Senior Citizens League, feel that seniors deserve a lot more. The nonpartisan senior group highlights a key change that, if enacted, could make a big difference.

A small change with a big effect

The CPI-W that COLAs are currently based on doesn’t survey the expenses of households of retirees over the age of 62, strangely enough. Yet this is what the government uses to determine how much of an increase seniors’ checks should get.

Many feel it would make much more sense to base COLAs on the Consumer Price Index for the Elderly (CPI-E), which focuses specifically on the expenses of retiree households. If they were, seniors’ checks would look much different in 2024.

Instead of a 3.2% boost, it would be an even 4% increase for 2024, which would come out to about $74 per month, or about $888 more per year. And some would see much larger increases, depending on the size of their checks today.

The Senior Citizens League has found that if the CPI-E were used to calculate COLAs instead of the CPI-W, the average beneficiary would have received an additional $2,689 from the program over the last 10 years. Again, this figure would be even larger for those with above-average benefits.

But this change doesn’t look all that likely right now. Some Congress members would like to increase Social Security’s buying power, but political divides and the program’s funding crisis mean this probably won’t happen anytime soon. Increasing Social Security benefits right now would only make the program insolvent more quickly, and without a new funding plan, that could lead to benefit cuts that take an even bigger toll on seniors’ checks.

What seniors can do

We don’t know what the future holds for Social Security yet, though we can hope that at some point, the government will step in and take measures to protect its longevity and help it better keep pace with inflation. But for now, we have to focus on what we’re able to control.

For those who aren’t claiming yet, it’s best to be strategic about when you apply. Claiming right away at 62 gets you more checks, but it also shrinks each one. On the other hand, delaying benefits leads to larger checks, but if you wait too long, you run the risk of dying before you can apply. So you must weigh your life expectancy and financial situation to decide on the best time for you to sign up.

Those already claiming should check to see if they qualify for additional benefits like supplemental security income (SSI). This is a monthly check administered by the Social Security Administration to low-income seniors, blind people, and disabled people. It might give you a little extra cash to help you cover what Social Security doesn’t.

Keep an eye on future changes to Social Security as well, so you can adapt your financial strategy over time. And if you feel strongly about what the government should do about the program’s future, it doesn’t hurt to reach out to your members of Congress to make your opinion known.

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