In 2024, over 66 million retirees who receive Social Security benefits will experience a 3.2% increase in their monthly payments. This boost results from the Social Security Administration’s (SSA) annual cost-of-living adjustment (COLA). As announced by the Social Security Administration on October 12, the average monthly Social Security retirement benefit will increase by over $50 starting in January.
Additionally, there are other yearly adjustments based on the rise in average wages. One example is the maximum earnings that can be subjected to Social Security tax, which will go up to $168,600, an increase of $ 8,400 (the amount for 2024 was $160,200). For a comprehensive comparison of 2024 benefits to 2024, one can refer to the SSA’s COLA fact sheet.
The COLA adjustment for Social Security benefits and Supplemental Security Income (SSI) helps retirees cope with rising living costs. As previously highlighted, this adjustment can be likened to purchasing inflation protection for a private annuity. Cost-of-living adjustments (COLAs) are based on data from the Bureau of Labor Statistics of the Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Experts have noted that the CPI report indicates that the Federal Reserve’s strategies to address inflation, mainly through significant interest rate increases, are making an impact.
Beneficiaries should expect to receive notifications about this increase from the SSA in early December. Those who have set up a personal My Social Security account can view their COLA notifications online. They can also opt to receive text or email alerts about new COLA messages if they register by November 14. Information regarding Medicare changes for 2024 will be accessible on the official Medicare website.
The Senior Citizens League (TSCL), a prominent nonpartisan group for seniors, had earlier projected the 2024 COLA to be 3.2%, based on consumer price data up to August. They commented, “While the 3.2% COLA is notably less than the 8.7% granted in 2024, which was the highest in over 40 years, it surpasses the two-decade average of 2.6%.” According to TSCL, this 3.2% adjustment for 2024 means that the average monthly retiree benefit of $1,790 will increase by $57.30.
To understand how COLA functions, the SSA compares the average prices of the current year’s third quarter to those of the third quarter of the preceding year. The fourth quarter’s data isn’t used because it’s typically unavailable until mid-January, and the SSA needs to implement its adjustment by January 1. For context, the 2024 COLA was set at 8.7% due to high inflation, marking the most significant increase since the 11.2% adjustment in 1981. As a result, Social Security benefits rose by over $140 per month in January 2024.