3.2% hike in Social Security benefits fails to keep up with rising costs, Western Pa. seniors say

Millions of Social Security recipients will get a 3.2% increase in their benefits in 2024, far less than this year’s historic boost and reflecting moderating consumer prices.

The cost-of-living adjustment, or COLA, means the average recipient will receive more than $50 more every month beginning in January, the Social Security Administration said Thursday. The AARP estimated that increase at $59 per month.

Nancy Michael of Hempfield has been retired since 2008 after working in nursing at Westmoreland Manor and as a nurse aide at Westmoreland Hospital. With rising prices, she and her husband, a Westmoreland County retiree, have cut back on eating out — something they may do even less, given the smaller increase in Social Security income that awaits them.

“I’ll have to cook more,” Michael said. “I don’t like that.”

About 71 million people — including retirees, disabled people and children — receive Social Security benefits.

Thursday’s announcement follows this year’s 8.7% benefit increase, brought on by record, 40-year-high inflation that pushed up the price of consumer goods. With inflation easing, the next annual increase is markedly smaller.

“Compared to last year’s 8.7% increase, this is going to feel small, and the perception is that it’s not keeping up with the inflation and the higher costs that retirees are still seeing,” said Martha Shedden, president of the National Association of Registered Social Security Analysts.

On top of that, an anticipated increase in Medicare premiums for 2024 will eat into the Social Security cost-of-living bump.

Medicare hasn’t announced the increase for traditional Medicare but said the cost of Medicare Advantage plans is expected to remain stable.

While Michael was departing from a tai chi session at Greensburg’s McKenna Center for Active Adults, Delmont resident Pat Wolfgang was in the thick of a game of Mahjong in the next room.

Wolfgang, a retired instructor who worked for a doula service, said she is fortunate to have an affordable rent but is concerned about other rising costs, including food.

“Right now I enjoy cooking for my neighbors,” she said. “Once a week I have them in, and then we play games afterward.

“I enjoy that so much, and I want the fellowship. But, if it came down to where to cut back, that’s where I’d have to cut.”

Boost applauded

Senior advocates applauded the annual Social Security adjustment.

“Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices,” AARP CEO Jo Ann Jenkins said. “We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important.”

Phil Pusateri, 71, of Apollo, said all of his expenses have gone up recently.

“Our life insurance has gone up, groceries have gone up,” Pusateri said. “Social Security sure isn’t going to keep up with it.”

Pusateri said he earned “a decent pension” after working for more than three decades as part of the Penn Hills Police Department, adding, “Between that and Social Security, we’re holding things down.”

Nancy Altman, president of Social Security Works, an advocacy group for the social insurance program, said the COLA is a “reminder of Social Security’s unique importance” and that “Congress should pass legislation to protect and expand benefits.”

However, the program faces a severe financial shortfall in the coming years.

The annual Social Security and Medicare trustees report released in March said the program’s trust fund will be unable to pay full benefits beginning in 2033. If the trust fund is depleted, the government will be able to pay only 77% of scheduled benefits, the report said.

There have been legislative proposals to shore up Social Security, but they have not made it past committee hearings.

A March poll by The Associated Press-NORC Center for Public Affairs Research found most U.S. adults are opposed to proposals that would cut into Medicare or Social Security benefits, and 79% of people polled said they oppose reducing the size of Social Security benefits.

The Social Security Administration is still without a permanent leader. President Joe Biden in July nominated former Maryland Gov. Martin O’Malley to lead the agency.

The COLA is calculated according to the Bureau of Labor Statistics’ Consumer Price Index, or CPI. But there are calls for the agency to instead use a different index, the CPI-E, which measures price changes based on the spending patterns of the elderly, such as health care, food and medicine costs.

Any change to the calculation would require congressional approval. But with decades of inaction on Social Security, and with the House at a standstill after the ouster of Speaker Kevin McCarthy, seniors and their advocates say they don’t have confidence any change will be approved soon.

Prudent spending

Lanna Planitzer, 84, of East Vandergrift, said her approach to handling her finances is realistic, and she has adjusted her urge to be a “clotheshorse” by shopping on QVC and being prudent with her spending.

”Right now I’m doing fine, but if prices go up anymore it would be good to have more,” Planitzer said. “I don’t go without, but I adjust my spending.”

“People may have to stop with the ‘I want’ and have ‘I need’ instead,” Planitzer said. “I realize it will hurt some people, like my boyfriend, he gets less so it’s not helping.”

Friends Bob Gould and Donna Reitler were chatting Thursday at Highlands Senior Center in Tarentum about the cost of groceries and gas when they got the news about the modest Social Security increase for 2024.

They reacted differently to the news.

Reitler, 80, lives at Dalton’s Edge Apartments run by the Allegheny County Housing Authority.

“Our rent is based on our income,” Reitler said. “When our check goes up, so does our rent, so everyone watches closely what we’re getting from year to year.”

Gould, on the other hand, owns a house in Tarentum, so he was hoping for a larger increase than 3.2%.

“I think it’s terrible,” the 85-year-old said. “The prices at the store are the same as they were a year ago, so this doesn’t match up.”

Gene Mash of Jeannette also found the increase inadequate.

“I’ve had it up to here with this government,” Mash said, gesturing to his forehead. “When they raise the taxes up, you’d bet (the increase) would be more than 3%.”

Reitler said the news is a mixed bag. While it impacts her rent, she would like to have a little extra spending money at the same time, she said.

Gould said he felt bad for people who earn less on Social Security and wouldn’t notice too much of a difference in their check.

The pair frequents the senior center for its $1 lunch as a way to stretch their checks each month.

Gould said that “3.2% of $20,000 isn’t the same as 3.2% of $30,000 or $40,000.”

Phillip Nardozzi, 73, of Plum, is retired but still does some occasional real estate work as well as television and film work as an extra.

“For my wife and I, we’re fortunate because we’ve been able to invest in different areas, our house is paid off, and we don’t have a lot of those overhead expenses,” Nardozzi said. “We both receive (Social Security) checks and, right now, it’s plenty.”

Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes will be $168,600 for 2024, up from $160,200 for 2023.

Retirees whose sole income comes from Social Security are not subject to taxes on that income.

Reporting by Associated Press and Tribune-Review staff writers Tawnya Panizzi, Joyce Hanz, Quincey Reese, Patrick Varine and Jeff Himler.