Retirees and other beneficiaries will receive a 3.2% cost-of-living-adjustment for their 2024 Social Security payments, less than half of this year’s increase as inflation has cooled.
This comes after beneficiaries received the largest COLA increase in 40 years this year, with payments increasing 8.7%, or over $140 per check, on average. Next year, the average beneficiary will receive an additional $50 a month.
Around 71 million people receive Social Security payments each month, including for retirement and disability benefits.
The COLA is an annual adjustment to Social Security benefits to ensure that they keep up with inflation. It is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a more general inflation measure than the headline Consumer Price Index for all Urban Consumers, or CPI-U.
Though it’s less than the COLA for the past two years, next year’s bump is actually more in line with the historical average increase, says Mike Lynch, managing director of applied insights Hartford Funds. For the past two decades, the average COLA has been 2.6%. In more recent years, it has been as low as 0%.
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. Poverty among elderly Americans rose precipitously in 2022: the share of people over 65 living in poverty grew to 14.1% last year, according to the U.S. Census Bureau. That’s up from 9.5% in 2020.
For those who aren’t retired yet, Lynch hopes the annual COLA announcement is a reminder to make a plan for retirement and save for it outside of Social Security. While other generations could rely on pensions in addition to Social Security, most people in the current day cannot.
“Retirement is really different than it was for other generations,” says Lynch, noting that it is often longer as people live longer lives. “Focus on Social Security, but also on all the other sources of income as well. We really have got to try to do everything we can from a personal savings perspective.”
Lynch advises near-retirees and retirees alike to spend some time on SSA.gov, the Social Security Administration’s website. It’s a great resource, he says, that can help people better plan out their retirements.
The Social Security COLA over the past 10 years:
- 2024: 3.2%
- 2023: 8.7%
- 2022: 5.9%
- 2021: 1.3%
- 2020: 1.6%
- 2019: 2.8%
- 2018: 2.0%
- 2017: 0.3%
- 2016: 0%
- 2015: 1.7%
Beneficiaries will see the adjustment reflected in their January 2024 payments.
Inflation may be moderating, but many seniors and others on fixed incomes have still not recovered financially after two years of painful price increases. Some have delayed retirement or gone back to work to stay afloat; others have tried to cut back on their expenses. Health care costs are especially onerous.
While the 3.2% boost will be welcome by many, Social Security benefits have lost over 30% of their purchasing power since 2000, according to nonprofit The Senior Citizens League, due in large part to “inadequate COLAs.” Next year’s increase will do little to solve that problem.
