The Social Security Administration’s highly anticipated annual cost-of-living adjustment (COLA) is set to be announced on October 12th. This is a significant event for the roughly 67 million Social Security beneficiaries who heavily rely on these benefits for their retirement income.
According to estimates from the Senior Citizens League, a respected pro-senior think tank, the COLA for 2024 is projected to increase by approximately 3.2%. While this may not match the substantial 8.7% increase seen in 2023, which was the highest in over 40 years due to soaring inflation rates, any COLA increase would still be greatly appreciated.
It’s important to note that the COLA is not a raise but rather a benefit adjustment that aims to keep pace with inflation and alleviate any pressures it may exert on beneficiaries. Over the last two decades, the average COLA has hovered around 2.6%.
For those receiving the average monthly benefit of $1,790, the projected 3.2% COLA increase would translate to an additional $57.30 per month, providing some relief to those dependent on Social Security as their primary source of retirement income.
The COLA is determined based on the consumer price index for urban wage earners and clerical workers (CPI-W), which puts more emphasis on expenses related to transportation, food, and apparel—items typically purchased by non-retirees residing in urban areas.
However, there is an alternate consumer price index called the CPI-E, which analyzes spending patterns specific to the elderly population. This index focuses more on healthcare, housing, and other goods and services commonly utilized by retirees. Certain legislators have advocated for a shift towards using the CPI-E in calculating Social Security’s COLA in an effort to enhance and expand the program.
To find out the official COLA announcement, be sure to mark your calendar for October 12th at 8:30 a.m. ET. It’s an event that deserves attention, so prepare your caffeine fix and stay informed about this critical aspect of Social Security benefits.
