The U.S. Department of Labor’s recent release of the September inflation report has significant implications for Social Security recipients, particularly concerning the cost-of-living adjustment (COLA) for the year 2024. This development, announced on October 12th, is crucial for understanding the financial landscape for beneficiaries in the coming year.
Overview of the 2024 COLA Increase
The COLA increase for 2024 will commence with the Social Security benefits distributed in January 2024. Additionally, increased Supplemental Security Income (SSI) payments will begin with the payment scheduled for December 29, 2023. The Senior Citizens League (TSCL), a nonpartisan advocacy group for senior citizens, projects a 3.2% COLA for 2024. This figure is notably less than half of the 2023 adjustment, which was 8.7%.
Calculation and Historical Context of COLA
The Social Security Administration (SSA) calculates the annual COLA based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year. The projected COLA of 3.0% to 3.5% for 2024, although lower than the previous year, is still higher than the 20-year average of 2.6%. This increase, while positive, may not significantly alleviate the financial concerns of seniors, especially considering the continued high costs of essentials like housing, healthcare, and certain grocery items.
Impact of Medicare Premiums on COLA
The full impact of the 2024 COLA will become clearer once the Medicare premiums for the year are announced, typically in November. The Medicare Trustees have forecasted that monthly Part B premiums will rise from $164.90 in 2023 to $174.80 in 2024. However, this estimate does not account for any “significant new costs” that may arise after its release, as noted by TSCL.
The announcement of the COLA for 2024 is a critical piece of information for Social Security recipients, offering a glimpse into the financial adjustments they can expect in the coming year. While the increase is higher than the average over the past two decades, it remains to be seen how effectively it will address the ongoing financial challenges faced by seniors, particularly in light of rising healthcare costs and other essential expenses.