Social Security benefits, such as retirements, payments for Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and others, will see a modest increment for the 2024 fiscal year.
As announced by the Social Security Administration (SSA) on Thursday morning, the Cost of Living Adjustment (COLA), an index that tries to keep up with inflation, will be 3.2%, which is much less than half of that strong 8.7% of 2022, which was the highest in decades.
How Much Additional Money Will the Social Security COLA Bring You?
The increase will be low, yes, but it still means that you are going to see more money in your account or paper check from January 2024. This results in an extra $50 per month for the typical retirement benefit that retirees will begin to enjoy from January onward. These annual boosts are referred to as Cost of Living Adjustments, or COLA.
The agency has announced that individuals receiving Social Security will commence receiving these enhanced payments as of December 29th, channeling a brighter financial outlook for many. Additionally, those with SSI and SSDI payments will also see increases proportional to the percentage increase announced by the SSA. In each case, the beneficiary will see in his account from January 2024 how much of an increase he will get.
The COLA Adjustment for 2024 – How Is This Measure Calculated by the SSA?
The cost of living adjustment is determined by averaging the inflation data from the months of July, August, and September. This calculation is specifically based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, which is published by the Bureau of Labor Statistics.
Rhe CPI-W showed promising growth, with an increase of 2.6% in July, 3.4% in August, and 3.6% in September, as per the latest inflation figures released by the bureau last Thursday. “Social Security and SSI benefits will increase in 2024, and this will help millions of people keep up with expenses,” said Kilolo Kijakazi, the acting commissioner of Social Security. SSI is Supplemental Security Income.
The Senior Citizens League considers that American retirees require larger increases to improve their purchase power and quality of life. The organization think that goods and services grow faster than the Social Security benefits. The organization asserts that individuals who retired prior to the year 2000 would require an extra $500 in monthly benefits to regain the same purchasing power they enjoyed in that year.
In the year 2023, an astounding 67 million individuals are currently enjoying the valuable support of Social Security benefits, as reported by the SSA. The majority among them are retirees, with nearly 90% of individuals aged 65 and above benefitting from this essential assistance as of June 30th.
What is the CPI-W?
The CPI-W, or the Consumer Price Index for Urban Wage Earners and Clerical Workers, is a variation of the Consumer Price Index (CPI). It’s a statistical measure that tracks changes in the price of a basket of goods and services that a typical American working-class household might purchase. What sets the CPI-W apart from the general CPI is its specificity. It zeroes in on the spending habits of households where over half of the income is derived from clerical or wage jobs. Moreover, in these households, at least one earner has been gainfully employed for a minimum of 37 weeks in the preceding year.
The Eight Major Groups: A Closer Look
- Food and Beverages: This category encapsulates the essentials, from daily meals to occasional treats.
- Housing: Whether it’s rent or mortgage, housing costs form a significant chunk of expenses.
- Apparel: Clothing and footwear, catering to both necessities and fashion statements, fall under this group.
- Transportation: This includes both public transport costs and expenses related to personal vehicles.
- Medical Care: From doctor’s visits to medication, this category covers a wide range of health-related expenses.
- Recreation: Leisure activities, hobbies, and entertainment costs are encapsulated here.
- Education and Communication: This spans school fees, course materials, and communication tools like phones and internet services.
- Other Goods and Services: A catch-all category, it includes various other expenses not covered in the previous groups.