Social Security’s 2024 COLA Will Be Solidified on Oct. 12 — Why Your Benefit Won’t Rise by More Than 3.5%
Written by
Vance Cariaga
Edited by
Daria Uhlig
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By the end of this week, Social Security recipients will find out how much of a raise they’ll be getting in 2024. The news should arrive on Oct. 12, when the U.S. Department of Labor releases its September inflation report and fills in the final piece of the puzzle for Social Security’s annual cost-of-living adjustment (COLA). The 2024 COLA is expected to be somewhere between 3% and 3.5% — a huge drop from this year’s 8.7% adjustment.
The Senior Citizens League (TSCL), a nonpartisan seniors advocacy group, projects a 3.2% COLA for 2024. There’s always a chance it could come in higher or lower, depending on September inflation numbers. But it’s unlikely to push above 3.5%, The Motley Fool reported.
A COLA of 3.5% would raise the average Social Security retirement benefit by $62.73 a month, based on the latest Social Security Administration data. A COLA of 3.2% would raise it by $57.34 a month. Both figures are less than half as much as the $146 average bump Social Security recipients got this year.
The SSA bases its annual COLA calculation on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter. CPI-W changes for July, August and September are added together and averaged, then compared with the Q3 average from a year earlier. The percentage difference is the amount of the COLA, which would be payable in Social Security checks beginning in January 2024.
A COLA of 3.0% to 3.5% COLA is still higher than the average over the past 20 years, which was 2.6%. While that’s good news, it might not do much to ease the financial concerns of seniors who still face high prices on essentials such as housing, healthcare and certain grocery items.
Even with this year’s 8.7% COLA, “nobody is getting rich,” according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
“The reality is that the dollar amount of the COLA increase received is meager at best, with the average monthly retiree benefit only $1,790 in 2023,” Johnson wrote in a recent press release she shared with GOBankingRates.
According to TSCL’s latest Retirement Survey, more than half of respondents (52%) reported spending $2,000 or more on monthly expenses in 2023. Meanwhile, Social Security benefits replace only about one-third of a middle earner’s average wages, according to the Social Security Office of Chief Actuary.
“Making matters worse, most older adults claim Social Security benefits before reaching full retirement age and receive permanently reduced benefits, according to TSCL’s Retirement Survey,” Johnson wrote.
The full impact of next year’s COLA won’t be known until Medicare premiums are announced, which is typically in November. As TSCL noted, the SSA automatically deducts Medicare Part B premiums from Social Security benefits before the benefits are received.
In an annual report released earlier this year, the Medicare Trustees forecast that monthly Part B premiums will increase from $164.90 in 2023 to $174.80 in 2024. That estimate doesn’t include any “significant new costs” that come up after the estimate is released, according to TSCL.
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