As the year draws to a close, Social Security beneficiaries eagerly await updates on how much their checks will increase in 2024. With inflation impacting purchasing power, the adjustment will be vital for retirees and others relying on these payments.
The final amount of the increase will be determined by the Social Security Administration’s (SSA) Cost of Living Adjustment (COLA), and beneficiaries are just weeks away from learning the exact figure.
Why Social Security Checks Are Updated
The primary reason for adjusting Social Security checks is to keep up with inflation. Inflation causes prices to rise, reducing the purchasing power of Social Security payments. For retirees and others who depend on these checks as their main source of income, this adjustment is critical. Without it, rising costs could make it difficult to afford essential goods and services, like groceries and medical care.
The SSA has been adjusting payments since 1975 using COLA, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks price changes for over 200 goods and services that are commonly used by wage earners.
The data collected during the third quarter of the year (July to September) is averaged and compared to the previous year’s data to determine how much Social Security payments will increase.
How Much Will Social Security Checks Increase?
All eyes are on the Bureau of Labor Statistics (BLS) as they prepare to release the final piece of data in October 2024. This data will determine the official COLA for next year. Based on current projections, the Senior Citizens League estimates the increase will be around 2.6%, a significant drop from last year’s 8% increase due to slowing inflation.
This COLA adjustment will impact not only Social Security checks but also Medicare Part B premiums and other benefits tied to eligibility requirements. For example, income and asset limits for Supplemental Security Income (SSI) will change, as will the amount per Social Security credit that you can contribute through taxes.
For more information on how Social Security adjustments are calculated, visit the ssa.
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What’s Next?
On October 10th, the BLS will release the September CPI-W data, and soon after, the SSA will announce the new COLA. This adjustment will help retirees and others maintain their financial security, despite inflationary pressures.
Beneficiaries should be prepared for a more modest increase than in previous years but can expect their payments to keep pace with current economic conditions.