Social Security benefits are getting a boost in 2024 thanks to the annual Cost-of-Living Adjustment (COLA). This increase is meant to help beneficiaries keep up with inflation.
How COLA is Calculated
The COLA (cost of living adjustment) calculation relies on the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). This index tracks changes in the prices paid for goods and services.
Historically, COLA increases have fluctuated between 0-5% depending on inflation trends. Recently they’ve been at the higher end due to rising prices.
The Announced Increase for 2024
For 2024, the Social Security Administration announced a COLA of 3.2%. This is lower than the 5.9% increase for 2022 but higher than other recent adjustments.
This 3.2% boost will increase the average retiree benefit by around $66 per month. Higher benefit amounts see larger dollar increases.
Key Factors Influencing the 2024 Increase
The Federal Reserve’s actions to combat inflation through interest rate hikes will impact prices and COLA going forward. Most economists expect inflation to cool in 2023-2024.
If price growth moderates as predicted, it would restrain the COLA increase for 2024 compared to 2022-2023’s historically high adjustments.
Who Will Be Affected by the Increase?
Over 70 million Americans on Social Security and SSI will see their monthly benefits rise by 3.2% social security increase in 2024.
For SSI recipients, the maximum federal payments will increase $38 for individuals and $57 for couples. Not all states supplement SSI payments.
The Increase’s Impact on Maximum Benefits
For workers retiring in 2023 at full retirement age, the maximum monthly benefit is $3,306. After the COLA, it will rise to $3,446 in 2024.
Early and delayed retirees have their benefit amounts adjusted accordingly based on the maximum.
The Importance of the COLA for Retirees
COLA increases help seniors on fixed Social Security income maintain their purchasing power when inflation erodes the value of benefits.
It also provides predictability for long-term retirement planning. Beneficiaries can rely on COLA to prevent severe losses of buying power.
Navigating the Increase as a Beneficiary
If receiving Social Security, expect a 3.2% automatic increase in your monthly benefits starting January 2024. Call 1-800-772-1213 with any questions.
Plan your 2024 household budget factoring in the COLA. Review Medicare premium adjustments as well.
Challenges and Considerations
Some advocates argue the CPI-W index used for COLA undercounts inflation, negatively impacting seniors. Proposed bills aim to shift to a “Seniors” CPI index.
There are also discussions around more frequent COLA adjustments rather than just annually to respond faster to price fluctuations.
Preparing for the Increase
Work with financial advisors to adjust retirement income and spending plans based on the 2024 COLA. Ensure you have adequate emergency savings as well.
Stay vigilant on budgeting and watch for guidance from Social Security on how benefits will change.
Additional Resources for Beneficiaries
Visit www.ssa.gov regularly for updates on COLA implementation. Use their benefit calculators to estimate how your unique benefits will change.
FAQs
How is the Social Security COLA calculated?
It is based on the 12 month increase in the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W) from Q3 to Q3.
When will the new COLA take effect?
The 3.2% increase will take effect starting with December 2023 benefits, which are received in January 2024.
How can I find out how much my benefits will increase?
Check your online Social Security account or call to speak with a representative who can provide your estimated new benefit amount.
What if I receive both Social Security and SSI benefits?
Your Social Security benefits will rise by 3.2% in 2024. Any SSI benefits will increase by the fixed amounts set by the COLA.
Related information
Federal Employees To Receive 5.2% Pay Raise In 2024
