Seniors grappling with the strain of soaring prices may anticipate a monthly boost of over $57 in their Social Security benefits for the upcoming year. While this expected increase is notably lower than the 8.7% boost observed this year, it surpasses the 20-year average of 2.6% and surpasses the 3% upswing foreseen just last month, as stated by the Social Security Administration (SSA).
According to projections from The Senior Citizens League (SCL), Social Security’s cost-of-living adjustment (COLA) is anticipated to be 3.2% in the next year. This would translate to a $57.30 increase in the average monthly retirement benefit of $1,790, set to take effect in January 2024. This estimation is grounded in the most recent inflation data unveiled on Wednesday.
Potential 3.2% Social Security COLA Increase
For the over 70 million retired senior citizens and disabled workers struggling under the weight of steep costs in areas like housing and healthcare, this development would be a welcome relief, as stated by the nonpartisan organization. “I’m exhausted from repeating it, but inflation remains an ongoing challenge for us,” remarked Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
The projection relies on inflation data sourced from the Bureau of Labor Statistics, revealing a 3.7% surge in consumer prices in August compared to the previous year, marking an increase from July’s 3.2% annual rise. Nonetheless, this represents a welcome improvement compared to the significant inflation witnessed in the previous year.
The official COLA, set to be disclosed by the SSA around mid-October, is computed by averaging the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year, encompassing data from July, August, and September 2023, and then comparing it with corresponding figures from the previous year.
Over the past 12 months, the CPI-W has experienced a 3.4% uptick, slightly exceeding the headline inflation rate. Specifically, for the month in question, the index recorded a 0.6% increase before seasonal adjustments.
While it’s improbable, it’s not entirely out of the realm of possibility that the inflation figures for September might elevate the COLA to 3.2% or beyond.
Medicare 2024 Anticipated Changes in Premiums and Implications for Beneficiaries
Historically, there have been only two instances in the past 23 years where the rate of inflation change from August to September was substantial enough to trigger such an increase. So, individuals can certainly begin taking their guesses.
Another significant factor affecting the financial planning of retirees for the coming year will be the release of Medicare premiums for 2024, which usually occurs in November. It’s important to note that the Social Security Administration automatically deducts Medicare Part B premiums from Social Security benefits before disbursing them to recipients.
Medicare Part B encompasses a range of healthcare services, including physician services, outpatient hospital care, specific home health services, durable medical equipment, and various other medical services that are not covered by Medicare Part A. In contrast, Medicare Part A focuses on inpatient hospital care, skilled nursing facilities, hospice care, laboratory tests, surgical procedures, and home health care.
One notable upcoming expense is linked to Medicare’s coverage of a new Alzheimer’s drug, known as lecanemab, which is marketed under the brand name Leqembi. This medication is anticipated to carry a price tag of $26,000 annually for those without insurance coverage.
Based on estimations of Medicare Part B expenditures, it is projected that the cost of this drug, along with the associated Part B services needed for its administration and patient monitoring to prevent potential side effects, could contribute an additional expense of approximately $5 per month to the Part B premium for all beneficiaries. This potential increase could raise the 2024 premium to approximately $179.80 per month.
Social Security SSDI and SSI Payments to Get a COLA Boost Too
Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), two important programs working under the SSA umbrella, will also be impacted by the 3.2% COLA increase. What does this mean for individuals receiving those SSDI and SSI benefits?
For those enrolled in SSDI, a program primarily tailored for individuals who have contributed to the Social Security system through their work history, the COLA signifies an increase in their monthly payments. On the other hand, SSI plays a pivotal role in offering assistance to low-income individuals grappling with disabilities. For this demographic, the COLA’s significance is no less profound.
Some other federal programs impacted by the COLA increase are: Clothing Purchase Subsidy (Eligible Veterans), Dependency and Compensation (DIC), and Supplemental Nutrition Assistance Program, also known as SNAP (this one is one part of the SSA but administered by the U.S. Department of Agriculture).