Social Security with increased COLA: predictions and what payments will be like in 2024
Next year, the COLA increase is projected to be less. Here are the predictions on the adjustment and what Social Security payments could look like in 2024.
Every year, the Social Security Administration announces what the cost-of-living adjustment will be, which is applied to Social Security benefits, including those of retired workers. The COLA represents an increase in monthly checks.
What is the COLA and how is it calculated?
Beginning in 1975, Social Security began automatic annual cost-of-living allowances, linking the COLA to the annual increase in the Consumer Price Index for Salaried Urban Workers and Clerical Workers, with the objective of not affecting the purchasing power of the beneficiaries.
The calculation of the COLA covers the third quarter of the previous year to the third quarter of the current year. The difference between the CPI-W of 2021 and 2022 was 8.7%, so the Social Security payments increased that percentage for 2023. This meant an increase of around $140 dollars to the monthly payments of the beneficiaries, but how much will they increase by 2024?
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Social Security with increased COLA: predictions and what payments will be like in 2024
In 2023, the COLA was higher due to high levels of inflation. By 2024, some experts expect a smaller increase in Social Security payments, as inflation continues to fall.
According to a June estimate from The Senior Citizens League, one of the nation’s largest nonpartisan senior groups, Social Security’s cost-of-living adjustment by 2024 could be 2.7%. This estimate was produced after the publication of the data of the consumer price index for the month of May. Last month, the prediction was a COLA of 3.1%.
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Annual inflation cooled in May to 4%, the smallest increase since March 2021. The CPI-W, the index used to determine the COLA, rose 3.6% year-over-year, the lowest level since March 2021, when it was 3.0%.
This is what Social Security payments could look like in 2024
Considering that the average monthly amount of Social Security checks is $1,827 in 2023, with a 2.7% increase, they would be around $1,876 in 2024. To get an estimate of your benefits in 2024, you can add 2.7% to your current monthly payment.
However, this calculation is not official, since the SSA calculates the payments on an individual basis each year by following a formula to determine the amount of your primary insurance, and later, the amount to send to each beneficiary .
The estimate of 2.7% for COLA 2024 is only preliminary and is subject to change. The official COLA for 2024 will be announced in October this year, taking effect in December.