Shortly, the Social Security Administration (SSA) will announce the increase of the Cost of Living Adjustment (COLA) for next year, an index to an index that helps these payments increase based on annual inflation. Usually, this is announced in October of each year, and then it is applied from the following January.
The COLA boost for Social Security payments is calculated annually based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To determine the COLA, the Social Security Administration compares the average CPI-W from the third quarter of the current year with the average CPI-W from the third quarter of the previous year. If there is an increase, Social Security benefits are adjusted accordingly.
When can recipients expect to see the COLA bump in their bank statement?
While 2023 saw a slower inflation pace compared to its predecessor, 2022, the consistent price escalations this year could translate into a decent COLA increase for Social Security retirees, as well as for Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). It might not reach the heady heights of the 8.7% leap of the prior year, but the New Year’s uptick will be noticeable.
The SSA will lock in the exact COLA bump for Social Security’s 2024 distributions based on inflation statistics spanning from the third quarter of 2022 to the same period in 2023. An official announcement will arrive around mid-October.
- Seniors: +$55
- Individuals with Disabilities: +$44
- Senior Couples (Both Drawing Benefits): +$89
- Widow(er): +$51
- Widow(er) with a Pair of Younglings: +$106
COLA Adjustment announcement date
Mid-October 2023, that’s when the SSA will unveil the 2024 rate for Social Security COLA payouts. This rate emerges from an inflation matchup between Q3 of 2022 and 2023.
Diving deeper, the SSA relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the summer months (July, August, and September) to chalk out the COLA. The CPI-W, a federal metric, charts price fluctuations in a basket of goods and services, including essentials like groceries, fuel, and healthcare.
Mark your calendar for October 12, 2023! That’s when the final piece of the CPI-W jigsaw for September 2023 drops. Industry whispers hint at a potential 3% COLA rise for 2024.
When Does the COLA Bump Show Up in My Bank Statement?
The fresh year of 2024 will bring with it the much-awaited COLA addition to your monthly disbursements. With money flowing out on specific Wednesdays, the date your bank balance swells depends on your birthday and the kick-off of your Social Security distributions.
- If your birthdate falls between 1st-10th, yours will show the second Wednesday of January 2024.
- If your birthdate falls between the 11th-20th, mark the third Wednesday of January 2024.
- If your birthdate falls between the 21st-31st, wait for the fourth Wednesday of January 2024.
- If you are a Supplemental Security Income (SSI) recipient, typically, your increase appears on the first day of the month, unless it’s a weekend or a holiday.
- And for the old-timers, who’ve been on the Social Security grid before May 1997, January 3, 2024, is the day to watch.
At what age can Social Security retirement benefits be initiated latest?
You can start receiving your Social Security retirement benefits as early as age 62, but if you do, your benefits are reduced for each month before your full retirement age.
The full retirement age (FRA), the age at which you can receive full benefits, depends on your year of birth. It’s gradually been moving later due to amendments made to Social Security in 1983. For anyone born in 1960 or later, the full retirement age is 67. For those born between 1943 and 1954, the full retirement age is 66. If you were born later than that, your retirement age increases by two months for every year past 1954 that you were born in.
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. This delay allows for the accumulation of delayed retirement credits, which increase the monthly benefit. After age 70, there’s no additional benefit increase, so there’s no advantage to delaying past this age
Finding the Optimal Age to Initiate Your Retirement Benefits
Selecting the age that fits the best for you is difficult, but there are some particularities you could take a look at. The retirement age can significantly influence the amount of your monthly payments and, consequently, your overall financial well-being during your golden years. You have the flexibility to initiate benefits as early as age 62 or as late as age 70.
Initiating Social Security retirement benefits at age 62 is the earliest option available. This age results in a reduced monthly payments compared to what you would receive if you waited until full retirement age. Now, if you’re married, starting benefits early can also affect your spouse’s survivor benefits. If you opt for early benefits and continue to work, there’s an earnings limit to consider. Exceeding this limit may result in a reduction of your Social Security payments.
There’s also the Full Retirement (FRA) option. At this age, you can receive full Social Security benefits, such as qualifying for the maximum monthly payment based on your earnings history. Once you reach your FRA, you can work and earn as much as you like without any reduction in your Social Security benefits. Delaying benefits can also enhance your spouse’s survivor benefits, providing greater financial security for both of you.
Social Security COLA Will Also Rise SSDI and SSDI Payouts
Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) are also part of the Social Security system umbrella. These program provide financial support to individuals with disabilities or those with limited income and resources, depending on every particular case.
SSI recipients should be aware that COLA increases may affect their eligibility, as SSI eligibility is determined based on income and resources. An increase in benefits could potentially impact other benefits or assistance programs individuals receive. In the case of SSDI beneficiaries, their payments are also set to increase.