After two years of significant increases, the Social Security cost-of-living adjustment will fall back down to earth for 2024, analysts say, reflecting the recent slowdown in inflation.
Social Security beneficiaries received the largest COLA hikes in 40 years this year, with checks increasing 8.7%, thanks to inflation. This followed a 5.9% increase in 2022, compared to 1.3% in 2021.
Though it’s still too soon for the official figure for 2024—it will be announced in October—it is likely to be around 3%, according to a new prediction from the Senior Citizens League (TSCL), a nonpartisan seniors’ advocacy group. That’s less than half of this year’s bump but still higher than many recent years. For the past two decades, the average COLA has been 2.6%.
An increase of 3% would result in an extra $53.60 for the average Social Security check, per TSCL, and beneficiaries will start receiving the adjustment in January 2024. That said, the final payment will depend on whether or not beneficiaries are also enrolled in Medicare: Part B premiums are automatically deducted from checks. The Medicare Trustees predicted earlier this year that Part B premiums will increase from $164.90 in 2023 to $174.80 in 2024—but it could be even higher than that.
Roughly 67 million Americans receive Social Security benefits, with the majority being retirees (disabled adults and surviving spouses also receive the benefits). Most elderly Americans depend on the monthly federal benefits, particularly those who are low income. Many do not have other savings or sources of income to fall back on; in fact, it is a “key” anti-poverty program for the elderly.
The COLA is based on average annual increases in the consumer price index for urban wage earners and clerical workers in July through September of the preceding year.
While inflation is moderating—it hit 3% in June, the lowest level in two years—it, along with a rocky stock market, have hit seniors and others on fixed incomes especially hard over the past few years. Some have had to make hard choices about what to pay for as their budgets are stretched thin; others have delayed retirement or gone back to work. Health care costs are especially worrisome for many.
Social Security benefits have lost over 30% of their purchasing power since 2000, according to TSCL, due in large part to “inadequate COLAs.”