A downside to the cooling inflation this year is that the cost of living adjustment (COLA) for Social Security is set to increase by just 3.2 percent for 2024, the Social Security Administration announced on Thursday.
It will affect more than 71 million Social Security and Supplemental Security Income beneficiaries. COLAs are made annually to help benefits keep pace with inflation, and the change for next year will result in an average of $50 per month for recipients – while the average monthly retirement benefit for workers will be $1,907, up from $1,848 this year.
AARP estimated the increase could be around $59 per month.
More Money Coming Soon
The majority of Social Security beneficiaries will see an increase in their monthly checks starting in January, while SSI beneficiaries will see an increase in their December checks.
About 71 million Americans – including retirees, disabled people, and children – currently receive Social Security benefits.
“This will help millions of people keep up with expenses,” said Kilolo Kijakazi, the Social Security Administration’s acting commissioner.
The Social Security cost-of-living adjustment is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Data from the third quarter is added and averaged and then compared with the third quarter average from the previous year, CNBC.com reported.
Social Security is financed by payroll taxes collected from workers and their employers, while the maximum amount of earnings subject to Social Security payroll taxes will be $168,600 for 2024, up from $160,200 for 2023.
Less Than The Last Increase
The 3.2 percent increase is less than half of this year’s 8.7 percent increase, which was brought on by record 40-year-high inflation that pushed up the price of consumer goods, including food. As inflation has cooled, the annual COLA increase is now smaller.
However, senior advocates still applauded the annual adjustment.
“Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices,” AARP CEO Jo Ann Jenkins said via a statement. “We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important.”
The 3.2 percent increase is also in line with last month’s estimate from The Senior Citizens League, a nonpartisan senior advocacy group.
“It’s a small amount, but it’s providing some cushion,” Mary Johnson, Social Security policy analyst at The Senior Citizens League, told CNN. “We have the hope that things are going to be more affordable.”
The Future of Social Security
While Social Security continues to be an important lifeline for seniors, the program is likely to face a severe financial shortfall in the coming years.
The annual Social Security and Medicare trustees report released in March warned that the program’s trust fund will be unable to pay full benefits beginning as early as 2033. If the trust fund is depleted, the government would be able to pay only around 77 percent of scheduled benefits.
As previously reported, Social Security is likely to be a serious political issue in the coming years.
Author Experience and Expertise
A Senior Editor for 19FortyFive, Peter Suciu is a Michigan-based writer. He has contributed to more than four dozen magazines, newspapers, and websites with over 3,200 published pieces over a twenty-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. Peter is also a Contributing Writer for Forbes and Clearance Jobs. You can follow him on Twitter: @PeterSuciu.