For some seniors, the Social Security cost of living adjustment (COLA) has been a difficult pill to take. Some people’s circumstances are so bad that they are thinking about going back to work to help support themselves.

In October, just after the announcement of the COLA, 2,000 American retirees participated in a poll by The Motley Fool. The results were alarming: half of them are thinking about leaving retirement to earn more money. The 50 percent rate is alarming, but it is frequently cited as a solution when seniors inquire about ways to increase their retirement savings. Seeking part-time flexible work can be a great way to increase income, improve health insurance, and build more social connections to prevent loneliness.

The COLA was, admittedly, low—just 2.5 percent—and would not significantly assist many seniors who are already having financial difficulties. The fact 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 period last year, which is skewed toward young workers rather than the elderly, is one of the primary causes. As a result, it is unable to accurately represent the costs that seniors face. The CPI-E, which uses the same data but is geared toward people 62 and older, would be a more suitable CPI.

This lifestyle disparity undoubtedly contributes to the 54 percent of retirees surveyed believing that the most recent COLA is insufficient, particularly in contrast to the 8.7 percent in 2023 or even the 3.2 percent in 2024. According to Jack Caporal, research lead at The Motley Fool, the average monthly Social Security benefit in 2024 following the 3.2 percent COLA is $1,907, indicating that many people do not care that the reduced COLA is a positive indicator. That falls far short of the $5,070 monthly expenditure of Americans 65 and older in 2023. It is not unexpected that a sizable portion of seniors surveyed believe they require an additional source of income, given that in 2022, just 54% of American households had a retirement account.

The fact that a significant portion of American seniors are entirely dependent on their benefits—at least 28% of those surveyed rely solely on their benefits to make ends meet—may contribute to the issue. Social Security benefits were never intended to cover all of a retiree’s expenses; at most, they were supposed to cover 40%. More over half of those surveyed—an additional 32%—are heavily dependent on their payments.

Caporal goes on For a number of reasons, including a feeling of purpose, daily routine, support for a charity or other cause, and more, retirees may wish to go back to work. However, the survey’s findings indicate that retirees who are considering changing jobs are motivated by the need to maintain their current standard of living and financial security.

The true problem of the effect of a low COLA on Social Security benefits

The primary concern raised by groups such as the Senior Citizens League (TSCL), a nonpartisan organization that advocates for senior citizens, is that, on average, Social Security benefits in 2024 will only be valued around 80 cents on the dollar when compared to 2010, which was already 14 years ago. This indicates that despite the changes, seniors’ purchasing power is declining. They are among the strongest supporters of the CPI-Eas measure.

TSCL’s executive director, Shannon Benton, explains By shifting the COLA calculation from the CPI-W to the CPI-E, which would more accurately reflect seniors’ evolving expenses, this year represents yet another missed chance to provide seniors with the financial respite they are entitled to. In order to guarantee that Americans may retire with dignity, seniors and TSCL call on Congress to act quickly to increase COLAs. This includes implementing a minimum COLA of 3 percent and shifting the COLA calculation from the CPI-W to the CPI-E.According to our research, 62% of seniors fear their retirement income won’t even cover necessities like groceries and medical bills, and 67% of them rely on Social Security for more than half of their income.

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