Every month, the Social Security Administration (SSA) disburses various benefits, catering to retired and disabled workers, along with other eligible recipients. Apart from Social Security payments, the SSA oversees additional programs, namely Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
These benefits experience annual increments, courtesy of the cost of living adjustment (COLA). COLA is meticulously computed and applied to these payments to safeguard against the erosion of their value due to inflation. To provide some context based on last year’s announcement, the cost-of-living adjustment for the following year should be unveiled on October 12th, coinciding with the Bureau of Labor Statistics (BLS) release of the CPI report for September.
When will the official announcement regarding the increase in Social Security benefits occur?
The COLA adjustment is scheduled to take effect in December, and recipients will see it reflected in their Social Security and SSI payments starting in January 2024. However, as January 1st is a federal holiday, those who typically receive payments on the first of the month can expect their first COLA-adjusted payment to be deposited into their bank accounts toward the end of December.
Based on the latest projection by the Senior Citizen League (SCL), the anticipated cost-of-living adjustment (COLA) for 2024 is expected to be approximately 3.2 percent. This estimate is derived from the consumer price index data for the months of July and August. The COLA is typically announced once the Consumer Price Index for Urban Wage Workers and White-collar Workers (CPI-W) data for July, August, and September becomes available for calculation. In 2024, the official COLA is expected to be disclosed in October.
How is the COLA determined? The COLA is directly tied to the annual fluctuations in the Consumer Price Index for Urban Wage Workers and White-collar Workers (CPI-W). The Bureau of Labor Statistics (BLS) regularly releases the CPI-W, along with a more generalized CPI index, on a monthly basis to assess price changes for households with distinct consumer patterns in different regions.
Nevertheless, concerning the COLA calculation, some organizations, such as the Senior Citizen League (SCL), an advocacy group for senior citizens, contend that a CPI tailored specifically for seniors should be developed, accounting for the unique consumption needs of this demographic. In the absence of such a dedicated indicator, the Social Security Administration (SSA) continues to utilize the CPI-W. The COLA is computed by comparing the average CPI-W figures from the third quarter of the previous year to those of the current year, specifically using the CPI-W data for July, August, and September in both years. For example, the difference between the CPI-W figures for 2021 and 2022 was 8.7 percent, resulting in a corresponding 8.7 percent increase in Social Security payments for 2023. As for 2024, there are only forecasts regarding the potential COLA percentage; however, the official announcement of the exact figure has not been made yet.