Government Shutdown Delays Social Security Cost-of-Living Increase

The ongoing government shutdown has postponed the announcement of the annual cost-of-living adjustment (COLA) for Social Security beneficiaries, affecting approximately 70.6 million individuals. Originally set for October 11, 2023, the announcement is now scheduled for October 24, 2023. This delay complicates financial planning for many, as the adjustment is tied to the September Consumer Price Index, which has not yet been released.

With the government shutdown now entering its third week, the situation highlights the broader impact of the impasse on essential services and benefits. The COLA increase is critical for retirees, disabled individuals, and children receiving Social Security benefits, as it is intended to help offset inflation. Projections from organizations such as the Senior Citizens League and the AARP suggest a COLA increase of approximately 2.7% for the coming year.

Concerns have been raised among beneficiaries about whether the anticipated increase will adequately address rising living costs. Sue Conard, a 75-year-old retired nurse from La Crosse, Wisconsin, has voiced her frustrations during a recent visit to the U.S. Capitol. Alongside fellow retirees from the American Federation of State, County and Municipal Employees, Conard lobbied for reforms to the COLA calculation, arguing that current methods do not accurately reflect the expenses faced by older Americans.

“The issue of how the COLA is determined is flat-out wrong because health care is not factored into the CPI,” Conard stated outside the Longworth House Office Building. Several lawmakers have proposed legislation to adopt the Consumer Price Index for the Elderly (CPI-E) for calculating COLA increases, which would account for spending patterns typical of older individuals, especially regarding health care and basic necessities.

Despite previous attempts, such as a proposal by Senator Bob Casey (D-Pa.) during the last session, a hearing on this legislative change has yet to materialize. The AARP has emphasized the importance of the COLA, describing it as a “lifeline of independence and dignity” for millions of older Americans. Nevertheless, many still struggle to meet fundamental expenses, even with the projected increase.

“I pay roughly $1,000 per month for groceries, which is significantly higher than in previous years,” said Vanessa Fields, a 70-year-old former social worker from Philadelphia. “The COLA doesn’t keep up with rising costs, and we’re going to be in bad shape if lawmakers don’t act.”

As the deadline for notifying recipients about their new benefit amounts approaches, the Social Security Administration has indicated that retirement and Supplemental Security Income benefits will still be adjusted on January 1, 2026, regardless of the ongoing shutdown. A spokesperson for the agency, who spoke on the condition of anonymity, confirmed that adjustments will proceed as scheduled, albeit amid significant operational challenges.

The implications of the government shutdown extend beyond the COLA announcement. According to the Social Security and Medicare trustees report released in June, the program’s trust fund is now projected to be unable to pay full benefits starting in 2034, a year earlier than previously estimated. If the fund is depleted, beneficiaries could face a reduction of up to 19% in scheduled benefits.

In addition to the funding challenges, the Social Security Administration has also faced workforce reductions, laying off approximately 7,000 employees from its staff of 60,000 earlier this year. This has placed further strain on remaining employees who are tasked with managing an increasing volume of claims and inquiries from recipients.

As the situation develops, the urgency for legislative action becomes more apparent. With millions relying on Social Security for their livelihoods, the need for a timely resolution to the government shutdown and a reevaluation of how COLA is calculated remains critical.