$59 Isn’t Enough of a Social Security Increase in 2024–What Should It Be?

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The Social Security Administration recently revealed that more than 71 million Social Security beneficiaries, including around 66 million retirement benefit recipients, will see their checks rise next year. But by how much, and will it be enough to cover increases in the cost of everyday necessities?

Keep reading for a look at the coming Social Security increase, including how it’s calculated, how it compares to previous increases, and why the Social Security 2024 COLA increase is getting so much attention.

See: 3 Ways To Recession-Proof Your Retirement

What Is the Social Security COLA Adjustment?

Every year, the Social Security Administration adds an annual cost-of-living adjustment, or COLA, to the amount Social Security beneficiaries receive each month. This amount depends on the difference in inflation between the third quarter of the current year and the same period in the previous year. The measurement tool for this is a subset of the consumer price index, known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

The upcoming 3.2% COLA is significantly less than 2023’s record-setting 8.7% increase and amounts to just an extra $59 per benefit check. Even though it continues to exceed the average 2.6% annual hike over the past 20 years, many people are concerned about whether this raise will be enough to counteract the effects of stubborn post-pandemic inflation.

How Does Inflation Affect Social Security Benefits?

The primary purpose of the COLA Social Security increase is to ensure that the purchasing power of Social Security benefits doesn’t decline over time due to inflation. In a perfect world, a $100 Social Security benefit should purchase the same amount of goods or services today as it did the previous year.

Unfortunately, that may prove not to be the case. The cost to rent or buy a home, for example, rose at a pace that far exceeds the COLA. Food costs, too, are shooting upwards. What the $59 increase offers is far from what it takes to maintain a decent living standard.

What Should the Social Security COLA Increase Be?

There’s no one-size-fits-all answer to the question of what the COLA should be. The approach calls for analysis, considerations of regional cost differences and income, and ensuring that Social Security continues to shield against changing economic conditions.

The COLA increase is determined by the Consumer Price Index, which is a crucial gauge of economic health. It reflects how the costs for goods and services shift, which is also what’s known as the inflation rate. In the U.S., inflation in recent years has been triggered by the global impacts of COVID-19, disruptions in the supply chain and the conflict in Ukraine leading to economic pressures.

How Does the 2024 Social Security Increase Compare to Other Rising Costs?

From 2011 to 2022, the annual rate of inflation in the U.S. climbed from 3.2% all the way up to 9.1%. This means the dollar’s buying power hasn’t been holding up well, making a COLA increase more significant now than perhaps at any time in the past decade.

Fast forward to October 2023, and you’d see that compared to the same month the previous year, prices had gone up by 3.2%. This statistic comes from tracking the 12-month changes in the CPI, which is what you’d look at when you want to know the monthly inflation rate for goods and services in the U.S. and is the statistic the Social Security Administration uses as a basis for the COLA increase in Social Security benefits.

But this rate doesn’t account for the rising costs of housing and food, which have increased at a greater rate than that reflected by that 3.2% figure. It’s a complex problem, and many feel that Americans deserve a social security system that does more than help beneficiaries just keep up. It should offer anyone who receives Social Security a real chance of thriving or, at the very least, maintaining a decent standard of living amid the uncertainties of our global economy.

The 2024 Social Security COLA Increase: Final Thoughts

Though the math holds up and is in line with how the COLA increase has been calculated in previous years, an extra $59 per check doesn’t seem sufficient, considering the soaring inflation rates and the nonstop climb of living expenses. Many feel that it’s time our government recalibrated the increase to better reflect people’s actual financial circumstances.

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