Government Shutdown Delays Social Security Cost-of-Living Increase Announcement

The ongoing government shutdown is affecting the announcement of the 2024 Social Security cost-of-living adjustment (COLA) for millions of beneficiaries. This announcement, initially set for Wednesday, is now postponed to October 24, 2023. The delay coincides with the pending release of the September Consumer Price Index, a key measure used to adjust benefits annually based on inflation.

Impact of the Government Shutdown on Social Security Announcements

The postponement of the COLA announcement highlights the challenges faced by many individuals due to the ongoing government shutdown, which has now entered its third week. As Congress struggles to find a resolution, millions are left uncertain about their financial planning for the year ahead.

Projected COLA Increase

• The Senior Citizens League and the AARP estimate a COLA increase of approximately 2.7%.
• About 70.6 million people, including retirees, individuals with disabilities, and children, receive Social Security benefits.

Many beneficiaries have expressed concerns regarding whether next year’s increase will adequately address the rising costs of living. Sue Conard, a 75-year-old retired nurse from La Crosse, Wisconsin, voiced her frustration over current calculations. She recently participated in a lobbying effort to push lawmakers to reconsider how the COLA is determined.

Calls for a New Measurement Method

Conard advocates for a recalibration of the COLA calculation to include a different index, the Consumer Price Index for the Elderly (CPI-E). This alternative index is designed to reflect the spending patterns of older adults, particularly on essential expenses like healthcare, food, and medications. A group of Democratic lawmakers has introduced legislation supporting this proposal, although a similar initiative by Senator Bob Casey, D-Pa., did not advance in the previous session.

Concerns from Beneficiaries

Myechia Minter-Jordan, CEO of AARP, highlighted the critical role the COLA plays for older Americans. “It’s not just a source of income; it’s a lifeline of independence and dignity,” she stated. However, many individuals still struggle to meet basic living costs even with increase adjustments.

• Vanessa Fields, a 70-year-old former social worker from Philadelphia, reports spending around $1,000 monthly on groceries.
• Fields emphasizes that the current COLA does not sufficiently cover escalating expenses, calling for urgent legislative action.

Future Projections and Workforce Challenges

The Social Security Administration is expected to start notifying beneficiaries about their new payment amounts in early December. Despite the delays, retirement benefits and Supplemental Security Income will still see adjustments beginning January 1, 2026.

However, the Social Security program is facing a significant financial shortfall projected to begin around 2034, as indicated in the annual trustees’ report released in June 2023. The trust fund’s depletion will lead to only 81% of scheduled benefits being paid.

Adding to these challenges, the Social Security Administration has reduced its workforce by at least 7,000 positions this year, placing additional strain on the remaining employees as they process rising claims and inquiries from beneficiaries.