Social Security Checks: Those on Social Security who are having difficulty because of persistent inflation may be disappointed with the most recent COLA announcement.
Social Security beneficiaries will receive a 3.2% cost-of-living adjustment in 2024, after receiving an 8.7% increase in 2023.
Learn how this affects monthly Social Security benefits and when seniors may expect to receive larger benefits.
What the average payout means for the COLA
Based on federal estimates, the average monthly Social Security benefit payment for a retired worker will increase from $1,848 to $1,907 with the implementation of the COLA for 2024. That adds up to an extra $59 a month.
The combined monthly payout for a typical retired couple will be $3,033, or $2,939 per month. For two people, that is an additional $94 a month in total.
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Social Security Checks
In January of 2024, the 2024 COLA will be implemented for almost 66 million Social Security beneficiaries.
On December 29, it will go into effect for almost 7 million people who receive Supplemental Security Income (SSI) benefits. It is an income supplement programme for the elderly, blind, and differently abled.
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Comparison of the COLA for 2024
For background, the previous ten years’ COLAs were:
- 2023: 8.7%
- 5.9% in 2022
- 1.3% in 2021
- 1.6% in 2020
- 2.8% in 2019
- 2018: 2%
- 0.3% in 2017
- 2016: 0% (no modifications)
- 1.7% in 2015
- 1.5% in 2014
What is COLA?
The purpose of cost-of-living adjustments is to offset the impact of inflation. According to the Social Security Administration:
“The COLA’s goal is to prevent inflation from decreasing the purchasing power of Social Security and Supplemental Security Income (SSI) benefits.”
By law, the federal government’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year—that is, the change in the index from the same time the previous year—is the basis for Social Security COLAs.
There won’t be a Social Security COLA for the following year if the CPI-W either shows no change in average over those four quarters or indicates a drop.
A consumer pricing index is a “measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services,” according to the federal Bureau of Labour Statistics. That is to say, it is an inflation indicator.
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Why some criticise the present COLA scheme?
According to critics, Social Security retirement benefits should not be tied to the CPI-W since worker expenses may differ greatly from retiree expenses.
In reality, from 2000 to 2022, Social Security retirement payouts lost 40% of their purchasing value, according to a research by the Senior Citizens League. The league claims that this is because seniors’ spending are rising more quickly than Social Security COLAs.
Why it can look like your 2024 COLA is much lower?
The Medicare Part B cost is typically subtracted from Social Security benefits for individuals who get both Medicare and Social Security insurance. Medicare’s Part B provides coverage for doctor visits and other outpatient services.
As a result, if the Part B premium rises concurrently with the COLA, as it will in 2024, the COLA will effectively be partially or entirely offset by the premium increase.
In previous decades, Part B increases have exceeded COLA increases. In 2021, Boston College’s Centre for Retirement Research found that Part B premium increases averaged 5.9% between 2000 and 2020, compared to a mere 2.2% for Social Security.
Social Security claimants will receive their exact 2024 COLA in December. Beneficiaries will receive a mail notice, as well as a digital copy through their online Social Security accounts.
