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The average Social Security benefit check will increase by $50 a month next year, the government announced Thursday, citing still-high inflation as the reason for the increase.
The law requires an annual cost-of-living adjustment for benefits, based on rising prices. This year’s 3.2% COLA is lower than that of the last two years, when runaway inflation sent costs soaring.
The extra money will show up in benefit checks for 7.5 million people who get Social Security Income benefits in late December and for more than 66 million Social Security recipients starting in January.
“Social Security and SSI benefits will increase in 2024, and this will help millions of people keep up with expenses,” said Kilolo Kijakazi, acting commissioner of the Social Security Administration.
But Rep. John Larson, Connecticut Democrat, said it’s not enough. He said the formula the government uses to calculate the annual COLA doesn’t track well enough with recent soaring prices for rent and food.
“In these difficult times, as the elderly and children struggle to make ends meet, Congress must reform Social Security and bring benefits into this century,” Mr. Larson said.
The average benefit check is $1,705.79 a month, though actual amounts can vary depending on the circumstances of each recipient.
The annual adjustment also applies to the payroll tax, which Americans only pay on earnings less than a certain level. The cap will rise from $160,200 this year to $168,600 next year.
News about the increase in benefits comes as the government eyes a grim fiscal picture.
The Congressional Budget Office said Uncle Sam ended fiscal 2023 with a $1.7 trillion deficit. Social Security spending is a major factor in the government’s red ink, with spending for the program increasing by $135 billion, to reach $1.342 trillion for the year.
The CBO said last year’s 8.7% cost-of-living adjustment drove most of the higher spending, though an increasing number of beneficiaries also played a role.
In 2021, the first year under President Biden, the COLA was 5.9%. During President Donald Trump’s four years, the COLA ranged from 1.3% to 2.8%, reflecting a more steady economy and inflation picture.
Under President Barack Obama, the COLA ranged from 0% in 2009, 2010 and 2015 to 3.6% in 2011, indicating a more tumultuous economy.
Social Security now takes in less money each year from payroll taxes than it pays out in benefits. The extra amount is covered, in budget terms, by two trust funds, which are rapidly being depleted.
The latest estimates say the funds will be empty early in the next decade, at which point the government can only pay benefits at the level of payroll tax income. That would mean a 20% cut to benefits.
Lawmakers on Capitol Hill know that changes are needed, but there is deep division over what to do, with some Democrats pushing to expand Social Security’s benefits, which would make the program more expensive to maintain.
The AARP, a lobby group for older Americans, said this year’s COLA was good news, but added that Congress needs to tackle Social Security’s longer-term issues.
“AARP is urging Congress to work in a bipartisan way to keep Social Security strong and to provide American workers and retirees with a long-term solution that both current and future retirees can count on. Americans work hard to earn their Social Security, and it’s only fair for them to get the money they deserve,” AARP CEO Jo Ann Jenkins said.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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