The Social Security Administration (SSA) has increased all benefits by 3.2%. Even if it is a little higher than most COLAs in the past, some seniors on retirement benefits believe it is too low.
Bear in mind that the prices of food are inflated, not to mention the fact that other goods and services are not cheap either. The older you older, the more likely you will need to spend more money on health care costs.
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Undoubtedly, the price of health care services has soared as well. From December until January 24, about 71 million Social Security beneficiaries will receive their new payment with extra cash.
What is the average amount Social Security beneficiaries may receive?
Thanks to the Social Security COLA jump, Americans on SSA benefits will collect about 50 dollars extra per month. Of course, this is a nice annual increase if you see the total amount after twelve payments.
In total, the average beneficiary can collect 600 dollars in just one year. So, if you are one of those who think this COLA increase is pointless, save the money and by the end of 2024 you will have a nice emergency fund worth $600.
The thing is COLA is not calculated using the expenses seniors may have. Instead, they use the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Therefore, it will reflect an increase but it may not be as high as it should have been. As a consequence, some reports claim that seniors on retirement benefits for a longer period of time have lost a lot of buying power. Something the Social Security COLA boost tries to avoid.
How much buying power have lost Social Security beneficiaries since 2000?
The Senior Citizen League claims that seniors may have lost about 40% of their purchasing power. That means, with the money they earn from Social Security , they can buy fewer things than they could years ago.
Do not forget that the price of Medicare Part be has gone up by about $10. The medicine plan has soared as well by about 25 dollars. The Medicare Supplement is going to be $10 extra per month.
Just by adding up those three things, you have almost spent the 50 dollars Social Security is giving you. As you can see, the examples were just for health care costs.
Of course, you will need more money to buy gas, pay bills, housing expenses. Hopefully, you have no mortgage in retirement because interest rates are exorbitant and it can drain your savings.
The latest Census Bureau data has shown that poverty is going up among seniors aged 65 or older. The percentage was 10.7% in 2021 and it was 14.1% in 2022. So, more and more retirees on Social Security need SNAP benefits and other alternatives to get by.