The recent survey conducted by Motley Fool revealed that a majority of retirees found this year’s cost of living adjustment from the Social Security Administration to be “insufficient”. Many retirees are considering returning to work to supplement their income as they feel that Social Security benefits are not enough to finance their lifestyles. The adjustment, known as COLA, was determined at 3.2 percent in 2024, lower than the previous year’s increase of nearly 9 percent. Retirees expressed concerns that the increase did not adequately meet their needs, with more than half considering returning to work due to inadequate income.
The survey polled 2,000 retired Americans who started receiving Social Security benefits in 2023 or later. The program currently provides benefits to around 66 million Americans. There are concerns that the trust fund which funds retirement benefits could be depleted if reforms are not implemented to ensure its sustainability. COLA adjustments are determined based on the rate of inflation, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers. However, concerns have been raised that the current COLA formula does not accurately reflect the inflation experienced by retirees.
Robert Brokamp, a senior retirement advisor at The Motley Fool, highlighted the discrepancy between the COLA adjustment and actual inflation experienced by retirees. He noted that while the COLA was 3.2 percent in 2024, Medicare premiums increased by almost 6 percent, indicating a potential gap in how inflation is measured for retirees. Brokamp suggested that retirees considering returning to work could benefit from part-time work for social and mental health reasons, as well as supplementing their income. He emphasized that delaying claiming Social Security benefits could lead to larger benefits and potentially a more sufficient COLA increase.
Brokamp also pointed out that retirees who were 70 years or older expressed more satisfaction with the 3.2 percent COLA increase in 2024. He attributed this to the benefits of waiting to claim Social Security, as delaying benefits can lead to larger payouts. Retirees who claimed benefits at age 62 typically receive smaller amounts, which may contribute to their dissatisfaction with COLA increases. Brokamp encouraged retirees to consider waiting to claim Social Security benefits, as delaying can result in a larger, partially tax-free income. Overall, the survey results indicate a growing concern among retirees regarding the adequacy of Social Security benefits and the need to explore alternative sources of income in retirement.
