Social Security’s cost-of-living adjustment for next year could fall from where it is this year amid decelerating inflation that in June came in at its lowest since the pandemic, an estimate from The Senior Citizens League revealed.
The cost-of-living adjustment, or COLA, is measured through increases in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers. This mode of calculation is meant to help retirees have their Social Security payments reflect the shifts in the rate of price increases in the market.
On Thursday, the U.S. Bureau of Labor Statistics revealed that CPI fell in June and on a yearly basis rose 3 percent, cooler than the previous month’s 3.3 percent, the third month in a row of deceleration. The slowing of the rate of price increases suggests that next year’s COLA could come in lower than in 2024.
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A sign outside a Social Security Administration building in Burbank, California. Some estimates suggest that the program’s cost-of-living adjustment could be lower next year.
VALERIE MACON/AFP via Getty Images
The Senior Citizens League forecasts next year’s COLA to be at 2.63 percent, slightly lower than their last month’s estimate of 2.57 percent, it said in a statement. Yet, this was below 2024’s COLA of 3.2 percent and substantially lower than the 8.7 percent retirees received in 2023.
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The new official estimate from the Social Security Administration is expected to be announced in October.
Newsweek contacted the Social Security Administration for comment via email on Friday.
“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 last year a COLA was determined to the third quarter of the current year,” an agency spokesperson told Newsweek last month.
Despite inflation showing signs of cooling, high price levels are still hurting seniors.
“Although easing inflation should relieve older consumers, the rapidly increasing price of groceries the 2020s have seen thus far mean financial relief is still far away,” The Senior Citizens League said in its statement.
The seniors group pointed out that between 2020 and 2023, the cost of average groceries soared 24 percent. The cost of eggs went up 86 percent, for example.
“While eggs captured many headlines with a rise of 86 [percent], many other key items, such as coffee, sugar, bread, and ham saw their cost increase by more than a third,” the group said.
The challenge of rising prices is having a real impact on the lives of seniors, it added.
“Rising grocery prices is creating food insecurity for many retirees. Feeding America estimated that 5.5 million Americans age 60 and above suffered from food insecurity in 2021,” it said.
The group conducted a survey and found that 34 percent had to rely on food pantries or applied for food stamps at some point in 2024.
“What’s more, 60 [percent] of respondents said food was the fastest-growing expense in their monthly budgets, which was more than double the next hardest-hit expense category, housing,” the group said.
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