By Mary Johnson, editor
Inflation is now at its lowest point in the past year. I’m overjoyed to see the price of eggs come down, although we still haven’t gotten back to $1.20 per dozen yet. One long-time neighbor of mine was raising chickens even before inflation hit. By the time the price of eggs at our local Walmart peaked at $8.00 a dozen, this neighbor established a local egg route. Recently she and her husband put in an incubator, and now they are selling chicks as a side hustle as well as the eggs.
But prices aren’t growing as fast as this time a year ago, and with just three more months of data left to come in, Social Security recipients will likely receive a lower Social Security cost of living adjustment (COLA) in 2024. Based on consumer price data for June, we estimate that the COLA for 2024 will be 3% as inflation continues its slow decline. But, of course, this estimate can still change, so stay tuned for the COLA announcement in mid - October.
Economists like to tell us that lower inflation should indicate that lower prices are coming. But let’s be real. We all know that hasn’t necessarily happened yet. TSCL’s recent study of the rising costs of the goods and services has found several examples of this. In fact, certain types of costs are very unlikely to come down — think dental services, which jumped by more than 16% since March of 2022, and home-owners insurance premiums up by 193% since 2000.
And even while we are looking hopefully for relief from high inflation and our high blood pressure, our government economists raise the specter of Social Security Trust Fund insolvency. The 5.9% COLA in 2022 and an 8.7% COLA in 2023 — the two highest back–to–back COLAs in more than four decades prompted both the Social Security Administration and the Congressional Budget Office to revise their solvency estimates of the Social Security Trust Fund. Although the two federal agencies tend to use slightly different methodologies to prepare their estimates of Trust Fund insolvency, the insolvency date advanced as TSCL feared it would, and it is now estimated that it would occur somewhere between 2032-2034.
If Congressional dysfunction continues and lawmakers can’t arrive at a plan to resolve Social Security’s financing issues, benefits would be cut by about 20% or more to match the amount of payroll tax revenues still collected by the program. One fix supported by 79% of participants in our January Senior Survey would resolve most of Social Security’s long-term financing issues. That option would be to apply the 12.4% Social Security payroll tax to all wages rather than only taxing the first $160,200 in earnings.
On the other hand, 61% of survey participants oppose cutting benefits by raising the age for full unreduced Social Security benefits from 67 to age 70. It remains to be seen how well Members of Congress are listening to their constituents on this matter.
How are you doing in 2023? Please take our 2023 Retirement Survey and let us know what you think! https://seniorsleague.org/2023-retirement-survey/