Ramsey Solutions personality Jade Warshaw breaks down how to get the most out of your Social Security benefits and more on “The Bottom Line.”
High inflation continues to wreak havoc on the finances of older Americans.
According to a new survey released by the Senior Citizens League, a nonpartisan group focused on aging issues. Social Security Benefits Purchasing power has fallen by 20% since 2010. On average, payments to retired workers would need to increase by $4,440 per year, or $370 per month, to make up for that lost value.
“The survey confirmed that prices older consumers are paying are exceeding cost-of-living adjustments (COLAs), putting many on the brink of financial hardship,” the report said.
Between 2010 and 2024, annual cost-of-living adjustments have increased benefits by about 58%. But over that same period, the cost of most goods and services purchased by the typical retiree has risen by 73%.
The ‘magic number’ for comfortable retirement hits all-time high
A Social Security card sits next to a check from the U.S. Treasury Department on Oct. 14, 2021, in Washington, DC. (Photo Illustration by Kevin Dietsch/Getty Images)/Getty Images)
The problem may soon get worse.
Recipients would receive a cost-of-living adjustment of 2.63% in 2025, below current levels. Inflation rate 3%This will be the lowest annual COLA since 2021. The Social Security Administration is expected to announce the final adjusted rates in mid-October.
In the 1990s and early 2000s, roughly 60% of cost of living increases outpaced inflation, compared with just 40% in the 2010s. So far in the 2020s, the only cost of living increase that has outpaced inflation is a record 8.7% increase in 2023.
“The reality is that COLAs are increasingly unlikely to keep up with inflation over time,” the report states.
Americans are worried about running out of retirement savings
Social Security recipients will receive a cost-of-living adjustment of 2.63% in 2025, which is below the current inflation rate of 3%. (iStock/iStock)
Consumers face a number of economic headwinds, including high interest rates and persistent inflation that is driving up the costs of everything from rent to gas to groceries. The burden falls disproportionately on lower-income Americans, whose already tight paychecks are more vulnerable to price fluctuations.
Inflation has fallen significantly from a peak of 9.1% recorded in June 2022, but remains Federal Reserve’s 2% targetAnd compared to January 2021, before the inflation crisis began, prices are up about 20%.
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Economic uncertainty is causing many Americans to reconsider whether retirement is a realistic goal.
More than a quarter of non-retired investors say that if they retire within the next 12 months, they will be forced to return to the workforce at some point because they haven’t saved enough, and 19% doubt they’ll be able to save enough to retire, another survey showed. Nationwide survey data.
“Americans believe they need more than $1 million to retire comfortably, a figure that can be daunting for even the most diligent retirement savers,” said Lorna Guymon, senior vice president of annuity sales at Nationwide.
