The Social Security Administration announced a 3.2% cost-of-living adjustment (COLA) for benefits starting in January 2024. This boost will impact over 66 million Americans who rely on Social Security, including retirees, disabled individuals, and survivors. It comes on the heels of this year’s unusually high 8.7% COLA.
What does this mean for you? Well, if you’re an average retiree collecting $1,561 per month now, you’ll see checks grow by about $50 a month. That’s an extra $600 more in your Social Security income in 2024. Not too shabby!
Those collecting disability benefits will also be cheering. Payments will increase by approximately $43 per month on average. And if you receive spousal or survivor benefits, those will swell too.
Now you may be wondering – how do they calculate this COLA business anyway? The Social Security Administration bases it on inflation trends over the past year using an index called the CPI-W. Say that ten times fast.
While inflation has cooled from its 40-year highs in 2022, it remains elevated. Supply chain kinks have ironed out and gas prices have settled, bringing some relief. But groceries and healthcare costs still strain budgets.
“This COLA provides a cushion for seniors facing higher costs,” said William Smith, an economics professor. “But long-term, Congress should consider recalibrating how they calculate the adjustment.”
Some advocate for a “CPI-E” that better reflects costs the elderly face, like increased healthcare expenses. That could mean even higher COLAs if implemented.
For now, count your blessings for the 3.2% increase. Is it as juicy as 2023’s big adjustment? Nope. But it still beats the 2.6% average COLA over the past 20 decades. And if inflation drops more than expected next year, this COLA may end up boosting your buying power!
So sit back and enjoy that larger social security deposit when it hits your account in January. You earned it!