The Social Security Administration revealed on Oct. 12 that recipients can expect a modest 3.2% annual cost-of-living adjustment (COLA) for 2024.

Starting in January, the average monthly payout is set to increase by $59, reaching an estimated $1,907.

The cost of living adjustment, impacting over 71 million Social Security retirement and disability recipients, has significantly diminished compared to the substantial inflation-driven increases of the past two years.

That’s because COLAs are based on inflation data, which has moderated lately. For everyday Americans living on a strict budget, however, the reality is different.

A much-needed boost, but still falling short

While this adjustment may seem meager, it does offer some relief, particularly in light of ongoing financial concerns among seniors.

“Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices,” said AARP CEO Jo Ann Jenkins.

“We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important."

However, the underlying issue remains: Seniors have seen their Social Security payments lose buying power over the years due to persistent inflation.

The 3.2% COLA adjustment for 2024 is notably smaller than the 8.7% boost seen in 2023 and the 5.9% increase in the previous year.

“Compared to last year’s 8.7% increase, this is going to feel small and the perception is that it's not keeping up with the inflation and the higher costs that retirees are still seeing,” said Martha Shedden, president of the National Association of Registered Social Security Analysts.

While the more modest adjustment is tied to cooling inflation numbers, the real cost of living for seniors remains high.

A recent survey by The Senior Citizens League revealed that over two-thirds of participants reported household expenses still being at least 10% higher than a year ago. For 56% of respondents, the concern that their retirement income won't cover essential costs is a significant worry.

In fact, the buying power of Social Security payments has decreased by 36% since 2000, according to a study by The Senior Citizens League.

To reach the 2020 buying power, monthly benefits would have to grow by $517. This stark reality has put many older Americans in a challenging financial position.

Advocates are calling for a change in the COLA calculation, suggesting that it should be tied to an index measuring inflation experienced by the elderly.

The current metric, which primarily reflects price changes for urban wage earners and clerical workers, might not accurately represent the financial challenges seniors face, especially regarding healthcare expenses, which make up a substantial portion of their spending.

The struggle persists for seniors facing poverty

Tracey Gronniger, managing director of economic security and housing at Justice in Aging, a national organization focused on fighting senior poverty, thinks that the hike may prove inadequate for seniors grappling with poverty.

Gronniger said: “It’s not enough in the sense that people are still trying to make ends meet, and they’re still kind of struggling to meet their costs for housing and for healthcare.”

With healthcare costs on the rise, it's becoming more challenging for seniors to afford essentials like food. Even basic groceries are becoming prohibitively expensive, impacting their overall quality of life.

Carl Brown, a 70-year-old resident of public housing in New York City, is acutely aware of this situation.

His monthly rent is linked to his income and is set to increase by $74 starting in November due to the rise in his Social Security benefits. That's on top of growing medical expenses, grocery bills, and coping with higher interest rates on his credit card debt.

“My income doesn’t leave me much after paying bills and buying groceries,” Brown told CNN. “I don’t know if I’ll ever have enough.”

Seniors also need to factor in Medicare Part B premiums, which are deducted from their Social Security benefits.

While premiums for 2024 have not been announced yet, the Medicare trustees estimated an increase of about $10. For many seniors, a significant portion of the COLA increase may be offset by rising healthcare costs.

“Social Security really only replaces about 30% or less of your earnings before you retired, and it’s not ever been designed to be extremely generous,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.