It ’ s also a number that has been criticized by consumer advocates , who say it ’ s insufficient after several years of steep inflation . One of those critics is Shannon Benton , the executive director of the Senior Citizens League , who thinks the administration should be making cost-of-living adjustments based on a different inflation index , one geared to the spending of seniors .

“ This year represents another lost opportunity to grant seniors the financial relief they deserve by changing the COLA calculation ,” says Benton . She says specifically that Social Security should be changing its calculations from those based on the Consumer Price Index for Urban Wage Earners ( CPI-W ) to ones based on the CPI-E , an index that uses seniors ’ spending patterns to gauge inflation .

The urban wage version came in at 2.2 % for September , the Bureau of Labor Statistics announced in mid-October .

Recipients this year received a 3.2 % cost-of-living increase , much lower than the 5.9 % hike in 2023 and the 8.7 % increase in 2022 , which were the biggest increases in four decades .

On average , retired workers ’ Social Security checks will increase by an estimated $ 48 to $ 1,968 on January 1 , according to the Senior Citizens League , an Alexandria , Va . - based seniors advocacy group .

The group , in a statement , said it had anticipated the cooling of inflation and a disappointing COLA since the beginning of the year , noting that it had predicted the 2.5 % increase long before the Social Security Administration ’ s mid-October announcement .

Benton says the league ’ s research shows that 67 % of seniors depend on Social Security for more than half their income , while

62 % worry that their retirement income will not be enough to cover essentials like groceries and medical bills .

She adds that the league and seniors are demanding that Congress take immediate actions to strengthen the cost-of-living adjustment “ to ensure Americans can retire with dignity .” Such actions would include “ instituting a minimum COLA of 3 % and changing the COLA calculation from the CPI-W to the CPI-E ,” Benton says .

The AARP said the COLA hike will bring seniors some relief , but many will still struggle with elevated consumer prices .

“ Inflation took a financial toll this past year , particularly on retirees , who often rely on Social Security as a key source of income ,” the AARP ’ s chief executive officer , Jo Ann Jenkins , said in a prepared statement . “ Even with this adjustment , we know many older Americans who rely on Social Security may find it hard to pay their bills . Social Security is the primary source of income for 40 % of older Americans .”

Both the Senior Citizens League and AARP , as well as other advocacy groups and labor organizations , have long supported using a consumer price index that more closely represents the price changes experienced by retirees . The CPI-E , they argue , is a better reflection of that , as it ’ s been growing more quickly in most years than the CPI-W , which does not accurately reflect the spending patterns of retired households .

The Senior Citizens League ’ s research shows that 62 % of seniors worry that their retirement income will not be enough to cover essentials like groceries and medical bills .

Retires , they note , tend to spend more on healthcare and housing costs and less on gasoline and energy prices . Energy costs currently have more influence in the cost-ofliving adjustments that the Social Security Administration uses because energy is weighted more heavily in the CPI-W .

— Jacqueline Sergeant

NOVEMBER 2024 | FINANCIAL ADVISOR MAGAZINE | 11