Social Security benefits: What is the estimated COLA adjustment for 2024?
The cost of living adjustment will mean an increase in Social Security payments to boost purchasing power. Find out by how much benefits will rise in 2024.
Each year, all Social Security benefits increase, thanks to the cost-of-living adjustment. The COLA is not a fixed amount, as the Social Security Administration calculates the necessary increase based on changes in the Consumer Price Index for Salaried Workers in Urban Areas and Clerical Workers (CPI-W).
This adjustment is made annually so as to maintain the purchasing power of the beneficiaries. Although in real terms, the increase is usually not enough in relation to inflation.
READ ALSO: Experts think Fed could hold rates steady
This is how the COLA is calculated
In 1975, Social Security began these automatic annual cost-of-living allowances. The COLA is calculated based on the annual increase in the CPI-W. The calculation covers the period beginning from the third quarter of the previous year to the third quarter of the current year.
For example, the difference between the CPI-W of 2021 and 2022 was 8.7%, so Social Security payments increased by that percentage for the year 2023. How much will the increase be in 2024?
Social Security benefits: What is the estimated COLA adjustment for 2024?
The annual increase in CPI-W is expected to be less than the last time, so the 2024 COLA increase will also likely be less. According to the most recent estimate from The Senior Citizens League, one of the largest groups of non-partisan seniors in the country, Social Security’s cost-of-living adjustment for 2024 could be 3%.
This estimate was based on data from the consumer price index for the month of July, which rose 3.2% from the year before.
READ ALSO: This is how the Illinois minimum wage will increase in 2024
The most recent estimate of 3% for the 2024 COLA is only preliminary and is subject to change. The Social Security Administration will announce the official 2024 COLA in October. COLA 2024 will take effect in December and will first apply to Social Security payments in January of next year.