Annually, the Social Security Administration unveils the cost-of-living adjustment (COLA), which entails a boost in payments disbursed to various beneficiaries, including retirees, survivors, and individuals receiving disability benefits. For instance, in 2021, the CPI-W for the third quarter stood at 291.901, while in 2022, it decreased to 268.421. This quarter-to-quarter difference of 8.7% signifies the precise increment that was applied to Social Security payments for the year 2023.
The Cost-of-Living Adjustment (COLA) is a vital measure that prevents the erosion of purchasing power for retirees, survivors, and disability benefit recipients. The calculation of COLA is based on the Consumer Price Index for Salaried Workers in Urban Areas and Clerical Workers (CPI-W). This calculation period spans from the third quarter of the previous year to the third quarter of the current year, determining the subsequent year’s increase in Social Security payments.
Anticipating Social Security Payments in 2024: What to Expect
Following a substantial COLA increase in 2023, driven by high inflation rates, a more modest increase is expected for the upcoming year as inflation has progressively subsided in recent months. Based on the latest estimation provided by The Senior Citizens League, a prominent nonpartisan senior group, the anticipated cost-of-living adjustment for Social Security in 2024 is predicted to be 2.7%. This estimation derives from the consumer price index data for the month of May.
During May, the CPI-W, the designated index for determining COLA, experienced a year-over-year rise of 3.6%, representing the lowest level since March 2021 when it stood at 3.0%.
Considering the average monthly amount of $1,827 for Social Security checks in 2023, a 2.7% increase would result in approximately $1,876 for 2024. It’s important to note that this calculation serves as an estimate and is not an official determination since the Social Security Administration (SSA) calculates payments individually based on a specific formula to determine primary insurance amounts and subsequent beneficiary payments.
Furthermore, the estimated 2.7% for the COLA in 2024 is preliminary and subject to change. The SSA will officially announce the COLA for 2024 in October of the current year. The implemented increase will be effective from January of the following year, reflecting in the corresponding payment cycles.