Social Security undergoes several important changes each year, with the most anticipated is the cost of living adjustment or COLA.
The latest inflation data is pointing to an above-average cost of living adjustment for the Social Security benefits for 2024.
According to The Motley Fool, the rampant post pandemic has led to unusually large cost of living adjustment in 2022 and 2023, however, the latest inflation data from the Labor Department has pointed to a smaller increase in SSA benefits for next year.
Yet, policy analyst, Mary Johnson of The Senior Citizens League, has recently upped her cost of living adjustment forecast to account for the acceleration in the August inflation, and beneficiaries are still on pace to get above-average raise next year.
The Social Security Administration still can’t finalize for the 2024 cost of living adjustment without the September inflation data. But the Labor Department did publish the August inflation, meaning that beneficiaries now have a little bit more insight as to how benefits payments could change next year.
Here is what a 3.2% cost of living adjustment means for Social Security Benefits:
Generally speaking, Social Security provides income to four group beneficiaries: retired workers, spouses, survivors, and disabled workers. The average monthly benefit paid to each group would look like this if Social Security does get a 3.2% cost of living adjustment next year:
- Retired workers: $,188.19
- Spouses: $910.08
- Survivors: $1,501.02
- Disabled workers: $1,534.41
However, beneficiaries should remember that the 3.2% cost of living adjustment is yet not set in stone. The SSA will issue a press releeasee with the official figure following the publication of the September CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) data next month.
The size of the annual cost of living adjustment depends on the fluctuation in the CPI-W, a metric that tracks how prices change over time across more than 200 categories of spending. Specifically, the average CPI-W from July, August, and September of the year is divided by the average CPI-W from the same months last year. Any percent increase becomes Social Security cost of living adjustment for the next year.