Social Security 2024: Millions of retirees who rely on Social Security as their primary source of income have been especially hard-hit by the rising cost of living in recent years. This impact is particularly severe for those on fixed incomes. Government data shows that among beneficiaries aged 65 and older, 15% of women and 12% of men depend on Social Security for 90% of their needs.
Although Social Security is designed to replace about 40% of pre-retirement income, four out of ten retirees rely on it for more than 50% of their income.
According to a recent AARP survey, 20% of persons 50 and over said they have no retirement savings, indicating that the number of seniors who rely on the program may increase in the coming years.
According to AARP Senior Vice President of Research Indira Venkateswaran, “daily expenses remain the top barrier to saving more for retirement, and some older Americans say that they never expect to retire” (April study).
Social Security 2024: What are retirees’ expenses?
The average household headed by an individual 65 years of age or older in the United States spent $57,818 in 2022, up over 11% from $52,141 in the previous year, as reported by the Bureau of Labor Statistics (BLS).
The largest expense for retirees was housing, which cost, on average, $20,362 annually or $1,697 monthly. This is consistent with a 2023 Harvard study that discovered that around one-third of senior-headed households are cost-burdened, indicating that housing costs account for more than 30% of their income.
According to government data, seniors’ household budgets were also significantly impacted by food ($7,306/year), medical costs ($7,540/year), and transportation ($8,172/year).
A retired worker’s average monthly payout was $1,919 as of July, or around $23,028 annually.
Stated differently, while Social Security benefits alone may be sufficient for certain Americans to cover their basic retirement needs, they won’t be for many households.
To put things in perspective, the minimum income required for an individual to live above the poverty line is $15,060. The income threshold for a household of two is $20,440.
Over 16.5 million older persons get Social Security benefits, which enable them to live above the official poverty line more often than any other program, according to a recent analysis of Census data conducted by the Center on Budget and Policy Priorities (CBPP).
The CBPP analysis issued a warning that, “depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among older adults.”
1500 Family Tax Rebate: Discover How to Claim the Arizona Families Tax Rebate
According to research, the majority of Americans are opposed to benefit cuts intended to save the program, which is expected to go bankrupt in around ten years.
Though neither former president Donald Trump nor vice president Kamala Harris has provided many specifics about their intentions, they have both pledged to defend the program.
How to optimize your benefits from Social Security
Depending on when they began collecting benefits, how much they made, and how long they worked, a person’s monthly Social Security check might vary greatly.
For individuals who are receiving at their full retirement age, the maximum payout this year is $3,822 per month. Seniors who retire at age 70 are eligible to receive up to $4,873, while those who retire at age 62 are limited to $2,710 per month.
Although the majority of Americans continue to claim benefits at age 62, research indicates that it’s generally preferable to wait until age 70 to start receiving them. This is so that you can benefit from an 8% benefit increase for every year you postpone retirement.
However, starting benefits as soon as feasible at age 62 results in a permanent 30% reduction in the retiree’s monthly check. When someone files for Social Security early, their spouse’s benefits are also decreased.
SNAP Florida Payment Schedule: Who is eligible to receive food stamps this week in Florida?
Nearly 68 million people will receive monthly Social Security benefits this year, with about 75% of those payments going to retired workers.
Seniors can find some relief in the fact that inflation is decreasing. Last month, the annual rate of inflation dropped to its lowest point in nearly three years. However, this also means that retirees should prepare for a lower cost-of-living adjustment (COLA) in 2025. According to the latest forecast from The Senior Citizens League, the 2025 COLA is expected to be 2.57%, down from 3.2% this year.
The final COLA for the next year is based on third-quarter inflation data (July–September) and will be officially announced by the government in October. Any adjustments will be reflected in the January checks.
