Social Security: Latest 2024 COLA Estimate Inches Higher

Several Social Security Cards on a US United States one hundred dollar bill $100 system of benefits for retired elderly people.
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Although inflation in the United States continued to fall in June — hitting its lowest level in more than two years — the latest Social Security cost-of-living adjustment (COLA) estimate for 2024 actually ticked higher.

Overall inflation in June 2023 rose 3% from the previous year, according to U.S. Bureau of Labor Statistics data released on Wednesday. That was the smallest 12-month increase since the period ending March 2021. The index for shelter was among the biggest contributors to the gain, reflecting rising housing and rental costs — something that has a particular impact on seniors with fixed incomes.

Based on the June BLS data, the 2024 Social Security COLA will be 3%, according to estimates from The Senior Citizens League, a non-partisan seniors advocacy group. That estimate is up from the prior month’s COLA estimate of 2.7%.

As The Senior Citizens League noted, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — the index that’s used to determine the annual COLA — rose only 2.3% year-over-year in June. However, the average inflation rate over the past 12 months rose slightly and therefore affected the COLA estimate.

The COLA estimate could change again because there are still three more months of inflation data to come before the final 2024 COLA is announced in October. The COLA is based on third-quarter inflation (July, August and September) as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

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As previously reported by GOBankingRates, a 3.0% COLA would represent a big drop from this year’s COLA of 8.7% — the highest since the early 1980s. Social Security beneficiaries can thank the soaring 2022 inflation rate for their bigger payments this year.

A COLA of 3.0% would raise the current average monthly benefit of $1,787.00 by about $53.60, according to The Senior Citizens League. However, Social Security recipients “won’t learn the bottom line” until Medicare Part B premiums are announced. Part B premiums are automatically deducted from most beneficiaries’ Social Security checks and those deductions can have a major impact.

“In many years, the Part B premium increase can take most, or even all, of the COLA, leaving little else to cover other rising prices,” Mary Johnson, The Senior Citizens League’s Social Security and Medicare policy analyst, said in a press release.

In its annual report released in March, the Medicare Trustees forecast that monthly Part B premiums will increase from $164.90 in 2023 to $174.80 in 2024. But as Johnson pointed out, that’s just an estimate and “doesn’t include any significant new costs that come up after the estimate is released.”

One of the most “significant” new costs could be Medicare’s coverage for another new Alzheimer’s drug, Lecanemab, known by the brand name Leqembi. It is expected to cost $26,000 per year without insurance.

“Based on spending estimates, we forecast that the drug and related Part B services required to administer and monitor the patient for dangerous side effects would add about $5 per month to the Part B premium for everyone, potentially raising the 2024 premium to about $179.80 per month,” Johnson said. “Altogether most beneficiaries may see their Part B premium rise by almost $15 per month from 2023. Other costs could drive Part B premiums even higher.”

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