It is highly probable that Social Security beneficiaries will receive a considerably smaller cost-of-living increase than the 8.7% adjustment they got in 2023. However, their certainty regarding this will come this week.
The Social Security Administration (SSA) annually introduces cost-of-living adjustments (COLA) to assist Social Security and Supplemental Security Income (SSI) recipients in maintaining their purchasing power in the face of rising inflation.
How Is the Social Security Cola Increment Calculated Every Year?
These yearly increments are calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) issued by the Bureau of Labor Statistics. The CPI-W measures the fluctuations in prices of everyday consumer goods and services. Basically, this measure is intended to help the national economy and its players to understand how much the prices of products and services have raised in the past twelve months.
Interestingly, the Labor Bureau regularly updates the CPI-W every month, reflecting the price changes in various consumer items such as food, utilities, and housing. Yet, only the data from July, August, and September are taken into account when determining the COLA for the upcoming year. The September price index, which contains the final data used to compute the COLA, is set to be published on Thursday, October 12th at 8:30 a.m. Eastern Time.
What to Expect If You’re a Social Security Beneficiary
The most recent estimate for the 2024’s COLA increase is expected to be around 3.2%, but it might fluctuate a couple decimals up and down, depending on the actual September inflation data, according to the Senior Citizen’s league, a nonpartisan senior advocacy group.
Now, there’s good news and bad news. The good news first: this means that the inflation is tending to lower from that staggering 8.7% from 2022, which stands as the biggest COLA increase in over a decade, following 2021’s 5.9%. Now, the bad news: The Senior Citizen’s Alliance (TSCA) cautions that a 3.2% raise would merely contribute an additional $57 monthly to the typical recipient’s $1,790 benefit, falling short of adequately supporting the living expenses for the majority of beneficiaries, as indicated by a recent research report by TSCA.
TSCL has also observed that the announcement of Medicare Part B premium rates, which are automatically withheld from Social Security payments, is still pending. The organization anticipates a potential increase in premiums of approximately $15, going from $164.90 to $179.80. This projection is partly based on information from the Centers for Medicare & Medicaid Services.
So far, we can just wait to the official announcement to finally get to know how our Social Security allotments and benefits will be impacted this year.