WELFARE
How did the reduced COLA for 2024 affect Social Security spending?
The annual welfare increase was far lower this year compared to 2023 with many seniors having to adjust their spending accordingly.
2024′s reduced Cost-of-Living Adjustment (COLA) for Social Security payments was not unusual. The increase is set each October based upon recent rates of inflation. However, the 2024 COLA, set at 3.2%, represents a significant drop from the 8.7% increase awarded in 2023.
A new study by Atticus, a law firm specialising in disability, sheds light on how recipients, particularly those receiving Social Security Disability benefits (SSDs), are adjusting their spending habits in the face of this financial situation.
The group surveyed 650 SSD recipients for the study. The vast majority were not pleased with the smaller increase for 2024; over 70% believe the 2024 COLA was insufficient, and a concerning 40% are already experiencing financial hardship due to the lower adjustment.
The survey delves deeper, illustrating how recipients are tightening their belts. Nearly 60% have cut back on dining out and entertainment. Additionally, 33% are actively seeking additional income sources, highlighting the urgency many face. Even essential purchases are being delayed, with 30% of respondents postponing major buys.
Looking ahead, anxieties are compounded by projections for a potentially lower COLA in 2025. This has left 3 in 5 beneficiaries worried about their future financial stability. Nearly 60% are actively considering taking on additional work to compensate for their anticipated decrease, despite what this could mean for reducing their benefits further.
However, current inflationary trends suggest a higher COLA for next year.
What could the 2025 COLA look like?
Since the calculation for the 2024 COLA, average prices have already risen 1.4%. This trend, if it continues throughout the year, could lead to a 2025 COLA exceeding the one beneficiaries received this year.
However, it’s important to note that this is a possibility, not a guarantee. The future COLA will depend on inflation throughout the rest of 2024. While a higher adjustment would be welcome news for beneficiaries, the anxieties highlighted in the Atticus study emphasise the need for long-term solutions to ensure financial stability for Social Security recipients, not just a hope that their benefits will keep track with inflation..