Inflation is an economic phenomenon that affects people of all ages and social classes, but for Social Security beneficiaries, its effects can be especially worrisome. The Social Security Administration (SSA) implements a strategy to ensure that beneficiaries do not lose purchasing power, because the higher the inflation, the higher the cost of living for American families.
As prices rise, the value of the dollar decreases, which means that the same dollars that a Social Security beneficiary receives today will not have the same purchasing power in the future. In response to soaring inflation rates, Social Security recipients are poised to see an uptick in their monthly allocations come 2024.
Inflation Drives Another Social Security Increment
As 2024 approaches, it is set to bring yet another windfall for Social Security beneficiaries. Recent inflation statistics from this past August shed light on a prospective 3.2% spike in the cost-of-living adjustment (COLA) as conveyed by the Senior Citizens League. For the uninitiated, the COLA’s annual modulation is the handiwork of the Social Security Administration.
It pegs the COLA to the year-on-year escalation seen in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The measurement stretches from the third quarter of the preceding year to that of the incumbent one. This mechanism has consistently catalyzed an upward trajectory for Social Security disbursements since 2022. An unambiguous figure for 2024’s COLA awaits the third quarter’s inflation numbers, due on October 12th.
Deciphering the 2024 COLA Impact on Social Security Checks
The COLA adjustment, gauged at 3.2%, is set to recalibrate Social Security payouts as follows:
How much will Social Security payments increase in 2024?
- Retiree: Increase of $58, culminating in an average check of $1,885.
- Worker with disabilities: Augmentation by $47, rounding up to $1,530.
- Senior duos (both on benefits): A rise of $95, averaging at $3,067.
- Widow(er): Increment of $55, finalizing at $1,759.
- Widow(er) alongside two offsprings: Jump by $113, peaking at $3,633.
These estimations pivot around the inflationary dynamics between Q3 of 2022 and Q3 of 2023. The Social Security Administration is slated to cement these numbers by mid-October.
When Can You Note the COLA Increment in Your Checks?
Beneficiaries can discern this augmentation in their January 2024 statements. With payouts slated for specific Wednesdays, the exact date hinges on one’s birthdate and the onset of their Social Security fruition.
To break it down:
- Birthdays from the 1st-10th: Your remittance is due on January’s second Wednesday.
- For those from the 11th-20th: Expect yours on the third Wednesday.
- And those from the 21st-31st: It’s the fourth Wednesday.
Supplemental Security Income beneficiaries are aligned with the month’s commencement, barring holidays and weekends. If you’ve been reaping the benefits pre-May 1997, mark January 3rd, 2024 on your calendar. A handy guide on Social Security explains the intricacies of these perks to help you understand them better. Also available are guidelines on initiating SSDI and SSI applications.
What is the Social Security COLA?
When you hear the term “Social Security COLA,” it’s not a reference to your favorite fizzy drink. It’s an essential mechanism designed to safeguard the purchasing power of millions of Americans. So, what exactly is the Social Security COLA?
The Social Security Cost-of-Living Adjustment, commonly referred to as COLA, is an annual enhancement in Social Security payouts. Its primary function? To ensure that beneficiaries’ purchasing strength doesn’t dwindle amidst inflating prices.
The CPI-W, or the Consumer Price Index for Urban Wage Earners and Clerical Workers, is the benchmark that drives the COLA adjustments. Year-on-year changes in this index determine whether Social Security recipients will get a bump in their checks. If this index shifts upwards by as little as 0.1 percent, it’s a green signal for the Social Security Administration (SSA) to recalibrate the benefits.
What is the calculation method for Social Security COLA?
The Social Security Cost-of-Living Adjustment (COLA) is calculated using a government measure of consumer prices for a variety of household goods and services, which tracks inflation. The COLA is designed to ensure that the purchasing power of Social Security benefits is not eroded by rising prices.
The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), an inflation measure tracked by the U.S. Department of Labor. The Social Security Administration (SSA) compares the CPI-W for July, August, and September of one year to the same period the year before. The average percentage change in the index over those three months determines the amount of the COLA.