Sixty-two percent of retirees are disgruntled with the mere 3.2% Social Security cost of living inflation adjustment for 2024, a survey by The Motley Fool finds.
Inadequate Social Security benefits — which now average $1,907 a month — have prompted 44% to consider returning to work, while 71% have cut back on non-essential spending because inflation is making it hard to make ends meet.
The benefits are not even half the average $4,818 that Americans age 65 and older spent each month in 2022, according to The Motley Fool.
On top of this, only 54% of Americans had a retirement account in 2022. The average retirement savings balance of those 65 and older is $426,070, according to Edward Jones.
The problem with how the government adjusts its COLA is that it “is often based on a big basket of goods and services that don't necessarily align with how most retirees spend their money,” Robert Brokamp, a senior retirement advisor at The Motley Fool, tells Newsweek.
“For example, the COLA was 3.2% [in 2024], but Medicare premiums went up almost 6%,” he continues. “So, I think there is an issue with how we measure inflation for retirees versus inflation for the rest of America.”
Another survey, by Northwestern Mutual found that Americans now think they will need $1.46 million to retire.
Motley Fool surveyed 2,000 retired Americans who began receiving Social Security benefits in 2023 or later. It found that 62% of Americans rely either exclusively (27%) or heavily (35%) on Social Security benefits.
Sixty-one percent of respondents said that they are struggling financially on a daily basis, and 90% said the Social Security Administration’s 3.2% COLA increase for 2024 was either somewhat (47%) or completely (53%) insufficient.
Most said the COLA, tied to inflation, doesn’t help them pay for essential living expenses. This may be because food, energy and housing inflation in the U.S. has been higher than the overall rate of inflation, costing seniors 65 and older $2,300 a month.
Thirty-nine percent said they are having trouble affording groceries, 31% are struggling to pay for utilities, 25% are struggling to cover healthcare costs, and 23% are scraping together enough money for housing.
Brokamp said that if a wave of seniors does go back to work, it would be a notable reversal of the millions who dropped out of the workforce, by choice or not, during the COVID pandemic.
“It was called the 'Great Resignation' by some people and it's now turning out to be the 'Great Sabbatical,'” he told Newsweek. “Because many of these people realize that they retired too soon. They got a nice break, but now they realize they have to go back to work.
“You might find a job that will work around your schedule,” Brokamp continues. “You work 10 to 20 hours a week, it gives you some extra money, it gives you a little bit of social interaction, which many retirees miss. So, it's probably not a bad idea for some of these people to go back to work for other reasons than financial reasons, but I think part of it is that people probably retired a little sooner than they should have.”
The Motley Fool poll found that 78% think the Social Security cost of living adjustment should be 6% to 9% each year, with 36% believing it should be north of 9%.
Forty-eight percent are confident that Social Security will continue to pay them benefits throughout their retirement, but 22% are not confident; 30% are neutral.
About 66 million Americans claim Social Security payments from the government to help fund their retirement.