Boomers face 50 percent cut to Social Security ahead of COLA changes
Social Security payments receive a cost-of-living adjustment (COLA) every year with some benefiting from the changes more than others.
Boomers are reportedly set to lose out next year once 2024’s cost-of-living-adjustment to Social Security is implemented.
This generation is recognized as including those born between 1946 and 1964 with many of them already receiving retirement payments.
If current predictions for next year’s COLA come to fruition, this age group may receive a real-term pay cut.
As it stands, Boomers are likely to see their Social Security entitlement slashed because they paid more into the system.
Furthermore, this generation is on average more reliant on the support provided than other age demographics.
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What is COLA?
COLA is the acronym that refers to the annual payment hike to Americans’ Social Security payments.
In 2023, the adjustment increased to a four-decade-high of 8.7 percent in the wake of soaring inflation.
Every COLA is determined based on inflation during the third quarter of the year which includes July, August and September.
Thanks to the Federal Reserve’s intervention, inflation has come down in recent months which means Social Security recipients should not expect a similar rate hike to last year.
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How much will COLA be?
The Senior Citizens League estimates that retirement payments may rise by around three percent in 2024.
This would mean the current average monthly benefit payment for Social Security benefits would be $1,789.
In real terms, this would mean that payments would rise by $53.70 a month for the average claimant.
However, a smaller COLA rise would Social Security claimants would find it trickier to pay off payments, such as debt, which has been acquired during times of high inflation.
From January 2000 to February, retirement benefits rose by 78 percent, while the cost of essential utilities jumped by 141.4 percent, according to data from the US Bureau of Labor Statistics.
Even if an increase of 3.1 percent is applied to Social Security payments, it will likely not be able to keep up with inflation.
Smaller COLA rises will not have as great an impact if someone’s retirement benefits are based on a median income of $28,000 to $38,000 for the Silent Generation that preceded boomers.
As such, it is likely that many claimants in this age range will have to find other ways to supplement their income outsidke of Social Security.
