Increase Social Security benefits – The reason why retirees did not like it
A recent Motley Fool survey found that most retirees view this year’s cost-of-living adjustment (COLA) from the Social Security Administration as inadequate, with half considering reentering the workforce because “Social Security does not provide enough income to support their lifestyle. According to the survey, 36% of retirees found the adjustment “completely inadequate,” while 27% found it “somewhat inadequate. The COLA for 2024 was set at 3.2%, a significant decrease from the nearly 9% increase the previous year.
The survey included responses from 2,000 retired Americans who began receiving Social Security benefits in 2023 or later. With approximately 66 million Americans relying on Social Security for retirement income, there is growing concern about the sustainability of the Social Security trust fund. Without reforms, there are fears that the fund will be depleted, jeopardizing future benefits.
Robert Brokamp, a senior retirement advisor at The Motley Fool, highlighted the discrepancy in how inflation is measured for retirees compared to the general population. “I think there is a problem with how we measure inflation for retirees versus inflation for the rest of America.”
He noted that while the COLA is based on a general basket of goods and services, it may not accurately reflect the spending patterns of retirees. “The problem is that this inflation is often based on a large basket of goods and services that don’t necessarily match how most retirees spend their money. For example, the COLA was 3.2 percent [in 2024], but Medicare premiums went up almost 6 percent. So I think there is a problem with how we measure inflation for retirees versus inflation for the rest of America.”
The COLA mechanism, established in 1975, is designed to adjust Social Security benefits to counteract inflation. Adjustments are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the third quarter of the current year. A spokesperson for the Social Security Administration reiterated that COLA adjustments are strictly tied to inflation rates, stating, “The COLA is set by law and is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year in which a COLA was determined to the third quarter of the current year.