Debate: Will the 2024 Social Security COLA Be High Enough?

Bloink: Yes, recently published data does suggest that inflation in the U.S. has begun to ease. That doesn’t mean that Americans have seen prices decline. Many are still struggling with the cost of basic necessities, including sky-high prices at the grocery store and gas pumps. Utility costs have also increased dramatically for many senior citizens.

Until the costs of these and other basic necessities are brought under control, we have to give Social Security benefits a cost-of-living increase that is proportionate to these costs.

Byrnes: Members of Congress are struggling to find viable ways to save the Social Security benefit system without reducing benefits for beneficiaries who are already in pay status. Unnecessary benefit hikes would instead further drain the system by offering an artificially high COLA when inflation is showing significant signs of easing.

With Congress fully focused on enacting meaningful legislation designed to control inflation, we should at this point at least take a “wait and see” approach as to whether another sky-high Social Security COLA is called for in 2024.

Bloink: The loss of buying power recorded among Social Security recipients in 2023 is one of the steepest losses that has ever been recorded. While we do need to focus on the solvency of the Social Security system, we also have to take steps to ensure that Americans who rely on those benefits are receiving a fair deal.

Byrnes: The bottom line is that we should be encouraging Social Security recipients to rely less on the entitlement program, not more. The 2023 COLA should be viewed as a one-off necessity that was approved to give beneficiaries the assistance they needed during unprecedented times — not the “new normal” of the Social Security system.

Bloink: According to some studies, Social Security recipients have lost 40% of their buying power since 2000. Many senior citizens can barely afford to buy a dozen eggs in today’s market. Lower-income and elderly taxpayers are those who are struggling the most under the burden of today’s inflationary marketplace.

We should take steps to ensure their financial security to spur economic growth in this country generally. We have certainly not reached a point in the fight against inflation where an “average” 3% COLA adjustment is going to cut it for these Americans.

Learn more with Tax Facts, the go-to resource that answers critical tax questions with the latest tax developments. Online subscribers get access to exclusive e-newsletters.
Discover more resources on finance and taxes on the NU Resource Center.
Follow Tax Facts on LinkedIn and join the conversation on financial planning and targeted tax topics.
Get 10% off any Tax Facts product just for being a ThinkAdvisor reader! Complete the free trial form or call 859-692-2205 to learn more or get started today.