Social Security: How much could the COLA be in 2024?
Last October, the Social Security Administration announced a 2023 COLA of 8.7 percent. How high could inflation push the 2024 COLA?
Each year the Social Security Administration (SSA) announces a Cost-of-living adjustment (COLA) that will be applied to the benefits it distributes to offset the impact of inflation. During times of high inflation, like the economic situation of many Social Security beneficiaries over the last year, the COLA can make a huge difference in one’s purchasing power.
The 2023 COLA reached 8.7 percent after unprecedented inflationary pressure racked the US and global economies. Although prices are still rising, the pace has slowed, and the COLA is likely to be a fraction of what beneficiaries saw this year.
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How is the COLA calculated?
The SSA uses the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA. The CPI-W tends to be lower than the CPI for All Urban Consumers (CPI-U) because it looks beyond just those shopping in cities where the standard of living tends to be higher.
Then, the SSA takes the average of the CPI-W for July, August, and September and compares that figure to the number recorded in October of the previous year. In October 2023, the CPI-W stood at 292.991, and by April, it had jumped to 297.265 (or 1.45 percent). The CPI-U, on the other hand, rose 1.65 percent.
How high could the 2024 COLA be?
Unless prices begin to fall, Social Secuirty beneficiaries and all those who receive payments from the SSA will see a 1.45 percent bump applied to their checks next year. In March, the average Social Security payment made to retired workers was $1,833, and with a 1.45 percent COLA, $26.50 would be added to their check each month. For those receiving Supplemental Security Incomes, benefits would increase around $10 to $688 a month.