Some seniors have found it hard to deal with the Social Security cost of living adjustment (COLA). Some people’s situations are so bad that a lot of them are thinking about going back to work to make extra money.
In October, right after the COLA was announced, The Motley Fool polled 2,000 American retirees. The results were alarming: half of them are thinking about leaving retirement to make more money.
It’s often suggested to seniors who ask how they can improve their savings for retirement, since finding part-time, flexible work can be a great way to make more money, get better health insurance, and meet more people to avoid being lonely, but the 50% rate is worrying.
Of course, the COLA was very low—2.5%—and it wouldn’t help many seniors who are already having a hard time making ends meet. One big reason is that it is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of this year and the average for the same time last year.
This index is skewed toward young workers and not the elderly, so it doesn’t really show how much seniors have to pay. It would be better to use the CPI-E, which is the same data but geared toward people aged 62 and up.
This difference in lifestyle is a big reason why 54% of retirees polled think this latest COLA is not enough, especially when compared to the 8.7% who thought the same thing in 2023 or the 3.24% who thought the same thing in 2024.
This is true even though many people know that the lower COLA is a good thing. Jack Caporal, research lead at The Motley Fool, says, “The average monthly Social Security payment in 2024 after the 3.2 percent COLA is $1,907.” That’s not even half of what people 65 and older spent each month in 2023, which was $5,007.
There were only 54% of American households with a retirement account in 2022, so it’s not surprising that a lot of retirees polled feel like they need another source of income.
It wasn’t supposed to be that hard for retirees to get by on Social Security benefits—at most, they were supposed to cover 40% of their costs.
But the truth is that a lot of American seniors depend on their benefits alone—at least 28% of those polled said they could not live without them. Another 32% depend on their payments a lot; this is more than half of the people surveyed.
Caporal goes on, “Retirees may want to go back to work for many reasons, such as to feel like they have a purpose in life, to give their days some structure, to help a charity or other cause, and more.” But the survey results show that retirees who are thinking about getting a new job want to make sure they have enough money to live the way they do now.
The true problem of the effect of a low COLA on Social Security benefits
A nonpartisan group called the Senior Citizens League (TSCL) works to protect the rights of senior citizens. One of the main points they make is that, compared to 2010, 2024’s average Social Security payments are only worth about 80 cents on the dollar.
This means that even with the changes, seniors are losing the ability to buy things. They are one of the strongest supporters of the CPI-E as a measure.
Shannon Benton, executive director of TSCL, says, “This year is another missed chance to give seniors the financial relief they deserve by switching the COLA calculation from the CPI-W to the CPI-E, which would better reflect how seniors’ costs are changing.” Seniors and TSCL want Congress to act right away to strengthen COLAs so that Americans can retire with honor.
For example, they want a minimum COLA of 3% and for the CPI-W to be used instead of the CPI-E to calculate COLAs. 67% of seniors get more than half of their income from Social Security, and 62% are afraid that their retirement income won’t even be enough to cover basic needs like food and medical bills.
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