According to Vibes.okdiario, Social Security benefits are available at various ages, but the Social Security income is the lifeline that many Americans rely on. This year, nearly 68 million Americans will receive this essential monthly benefit, with a significant portion being retirees. For those aged 65 and older, this extra income is vital in the absence of a steady paycheck. Remarkably, 42% of women and 37% of men in this age group receive at least half of their income from Social Security.
The Financial Pressure on Retirees
Despite receiving Social Security payments, many retired adults are facing increasing financial challenges due to years of inflation. According to data from The Senior List, the average retiree spends around $2,984 per month, which is approximately $1,300 more than the average Social Security income. Consequently, it’s no surprise that 43% of retirees express greater financial concerns now than they did before retirement.
Concerning Trends Among Retirees
Amie Clark, co-founder and editor-in-chief of The Senior List, highlights some troubling statistics:
- Over half of retirees feel as though they are living paycheck to paycheck.
- More than 25% frequently stress about affording basic necessities.
These statistics underscore the increasing financial strain on retirees, making effective resource management and future planning essential.
Social Security’s Cost-of-Living Increase
Great news for retirees! The Social Security Administration has recently announced a cost-of-living increase (COLA). But how much can you expect this increase to be, and will it significantly alleviate your retirement expenses? To provide insights, we consulted experts in Social Security, retirement, and finance.
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Understanding the Cost-of-Living Increase
The cost-of-living increase is designed to adjust Social Security payments to reflect rising costs of essential goods and services. This adjustment is a relatively recent development in the broader context of Social Security.
Kevin Walton, a registered Social Security analyst certified by the National Association of Social Security Analysts, explains, “The cost-of-living adjustment, or COLA, was established by Congress as part of the 1972 Social Security Amendments. Automatic annual COLAs began in 1975. Before this, benefits were only increased through special legislation enacted by Congress.”
Since its introduction, the COLA has enabled beneficiaries to anticipate annual adjustments. Stephen Kates, a certified financial planner and principal financial analyst for RetireGuide, notes, “The Social Security cost-of-living adjustment is an annual increase applied to every recipient’s benefits, calculated based on the change in the consumer price index over the past year.”
Conclusion
As inflation continues to impact retirees, the Social Security cost-of-living adjustment provides essential relief. Understanding these adjustments can help retirees better plan their finances and ensure they are prepared for future expenses.
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