In a matter of weeks, the Social Security Administration is set to unveil its annual adjustment for the cost of living in 2024. Drawing upon inflation statistics and various economic cues, analysts project that the 2024 Social Security COLA could reach approximately 3.2%, equating to an extra $58 per month for the typical retiree.
The official 2024 COLA increase will be determined by the SSA in mid-October, and notifications will be sent to beneficiaries throughout the year’s end. Given the recent easing of inflation in 2023, it is anticipated that the Social Security cost of living adjustment will be significantly lower than last year’s substantial 8.7% increase, which marked the largest in four decades.
How to Determine Your 2024 Social Security COLA
To get an early estimate of your benefits, you can create an account on SSA.gov. Once your account is verified, you’ll be able to access an estimate of your retirement benefits and explore how these benefits may change depending on your chosen retirement age. When the COLA is officially announced, you’ll receive precise details about your adjustment in the “messages” tab within your SSA portal. To stay informed, consider opting for email or text notifications in your message center preferences.
If you prefer to calculate your new Social Security benefit independently, you can do so by multiplying the percentage increase by your current monthly benefit amount. For example, if you currently receive $1,822, which is the average monthly benefit for retirees, and you multiply it by the estimated COLA of 3.2% (0.032), you can anticipate a monthly benefit of approximately $1,880 in 2024—a $58 increase.
Maximizing Your Social Security Income
Transitioning away from the workforce can lead to adjustments in how you manage your everyday financial needs. According to the SSA, Social Security benefits typically constitute approximately 30% of the income for individuals aged 65 and above, and nearly 9 out of 10 people in this age group rely on Social Security.
Considering factors like a monthly benefit of $1,822, increasing interest rates, and the rise in food costs, it may pose challenges for the average recipient to maintain financial stability. Nevertheless, there are strategies available to help you extend and complement these benefits to align with your preferred lifestyle.
Increasing Your Retiree Benefits Through Interest-Bearing Accounts
One simple way to enhance your retirement benefits is by allocating a portion of your Social Security payments into an interest-bearing account. In fact, numerous banks and credit unions presently provide high-yield savings accounts, often with interest rates reaching 4% or even 5%.
For retirees who can set aside a substantial portion of their monthly payments, exploring a certificate of deposit (CD) might be advantageous. Since you commit to locking your funds away for a predetermined period, banks and credit unions typically offer more attractive Annual Percentage Yields (APYs) for these CD accounts.
Alternatively, a money market account presents another avenue for earning interest. Unlike CDs, these accounts grant more convenient access to your funds through features like debit cards and check-writing privileges. The annual Cost of Living Adjustment (COLA) hinges on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as reported by the Bureau of Labor Statistics. To calculate the COLA, data from the third quarter of the previous year to the third quarter of the current year is used.