The consumer purchasing power of U.S. Social Security program benefits in 2024 is roughly 80 cents on the dollar when compared to the power of these benefits in 2010, illustrating the continued bite that inflation is having on American households as well as the diminished buying power of those living on a fixed income.
This is according to a measurement of Social Security benefits conducted by The Senior Citizens League (TCSL) in a study released last week.
“The study confirms that prices older consumers are paying have outstripped cost-of-living adjustments (COLAs), leaving many on the edge of financial distress,” TSCL explained. “For example, consider the COLA of 5.9% implemented in 2022. While the raw value was historically high, inflation came in 1.1 percentage points higher, at 7%, according to the Consumer Price Index (CPI).”
That trend has been something of a fixture for most COLAs issued since the start of the 2010s, the study indicated. Eight of the past 15 COLAs have “failed to surpass inflation for the year in which they were implemented, with five of these COLAs ranking in the bottom ten since 1976 in terms of their strength relative to inflation,” the study said. COLAs began to be determined by the CPI in 1976, which is why that year was chosen as a starting point.
Edward Cates, chairman of TSCL, said that the Social Security program will require significant funding increases if it aims to help U.S. seniors overcome this challenge.
“Payments would need to rise by an additional $4,442 per year, on average, to rebuild their value to 2010 levels,” he said. “It’s unlikely that we’ll see the sustained growth needed for benefits to recover their buying power without changes to Social Security itself.”
While COLAs in 2021 and 2022 were some of the highest that the program has seen in its history due to the increased cost of living brought about by the COVID-19 pandemic, they are “the exception” and not “the norm,” Cates said.
“And Social Security brings in less money than it sends out: It’s on track to become insolvent in 2033 and, consequently, see benefits cut by 23%,” he added.
The projected insolvency date has fluctuated somewhat over the past few years. In May, the Social Security Board of Trustees announced that the year at which benefits would need to be cut has been extended to 2035, but swift action on the part of lawmakers — who often debate the fundamentals between whether or not the program should be expanded or even exist — would be required for any substantive changes to the program’s solvency.
“Fighting” for and “protecting” the Social Security program, a promise that includes “no cuts” to it, is an issue listed as a core promise of Donald Trump’s 2024 presidential campaign, according to the “platform” section of his website.
As of Monday morning, following the exit of President Joe Biden from this fall’s election, a specific platform dedicated to the policy positions of Vice President Kamala Harris is not yet available. Harris is inheriting campaign funds from Biden, who has made similar promises about protecting Social Security.
