Government Shutdown Delays Social Security COLA Announcement

The ongoing government shutdown has delayed the announcement of the annual Social Security cost-of-living adjustment (COLA) for approximately 70.6 million beneficiaries. Initially set for release on October 18, 2023, the announcement is now scheduled for October 24, 2023. This adjustment is typically based on the September Consumer Price Index (CPI), which has also yet to be published. The disruption is impacting many individuals as they seek to plan their finances amid ongoing uncertainty.

As the shutdown enters its third week with little progress toward a resolution, beneficiaries express increasing concern about the adequacy of next year’s COLA. Projections from the Senior Citizens League and the AARP estimate an increase of approximately 2.7%. Social Security beneficiaries, including retirees and disabled individuals, are worried that this increase will not sufficiently cover rising living costs.

Concerns from Beneficiaries and Advocates

Sue Conard, a 75-year-old retired nurse from La Crosse, Wisconsin, recently joined other retirees in lobbying at the U.S. Capitol for significant reforms to Social Security benefits. She highlighted the need for a reassessment of how COLA is calculated, arguing that the current CPI does not adequately reflect the expenses faced by older Americans, particularly in healthcare.

“The issue of how the COLA is determined is flat-out wrong because health care is not factored into the CPI,” Conard stated during her advocacy efforts. Some lawmakers have proposed using the Consumer Price Index for the Elderly (CPI-E), which focuses on the spending patterns of older adults, to calculate future COLA increases.

Democratic lawmakers are pushing for legislation to implement this change. Although Sen. Bob Casey of Pennsylvania introduced a bill last session to adjust the COLA calculation, it did not receive a hearing in the Senate Finance Committee.

Financial Pressures and Future Implications

Myechia Minter-Jordan, CEO of AARP, emphasized that the COLA serves as more than just a financial adjustment; it is a crucial support for the independence and dignity of many older Americans. Despite adjustments, many still struggle with basic expenses. For instance, Vanessa Fields, a 70-year-old former social worker from Philadelphia, shared that her grocery bills have surged to about $1,000 monthly, surpassing previous years. She warned, “The COLA doesn’t keep up with rising costs, and we’re going to be in bad shape if lawmakers don’t act.”

Despite the delay in announcing the COLA, a spokesperson from the Social Security Administration (SSA) indicated that retirement and Supplemental Security Income benefits would start adjusting on January 1, 2024, without any interruptions due to the government shutdown.

The delay also coincides with alarming forecasts regarding the financial sustainability of the Social Security program. A report released in June by the annual Social Security and Medicare trustees noted that the program’s trust fund may exhaust its ability to pay full benefits by 2034, a year earlier than previously projected. If the fund is depleted, beneficiaries may only receive 81% of their scheduled benefits.

The SSA has also faced workforce challenges, having laid off at least 7,000 employees earlier this year, putting additional strain on the remaining staff who are tasked with handling an increasing volume of claims and inquiries.

As the government shutdown continues, the impact on Social Security beneficiaries remains a pressing concern, highlighting the urgent need for legislative action and reform to ensure the financial stability of this vital program.