In 2023, the Social Security Administration (SSA) implemented an 8.7 percent Cost of Living Adjustment (COLA), marking the highest annual increase since 1981.
These annual adjustments are intended to ensure that Social Security benefits keep up with inflation. However, for 2024, it is expected that the COLA will be significantly lower due to progress made by the Federal Reserve in curbing inflation. The official announcement for the 2024 Social Security COLA is expected in mid-October.
Expert predicts Social Security cost of living increase for 2024
“If the COLA index used for Social Security does not keep up with the actual inflation people experience, their purchasing power declines,” Doug Carey, president and owner of WealthTrace, told Forbes.
“We saw this happen nearly every year over the past 10 years as the COLA for Social Security consistently came in below regular inflation.”
How much will benefits increase for people with dependants?
The calculation of the Social Security COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks changes in consumer prices for blue-collar American workers, including hourly and clerical workers. The most recent CPI-W reading indicates a 3.4 percent increase from the previous year.
For context, the average Social Security benefit in August 2023 was $1,705.79. A three percent COLA would translate to a monthly increase of $51.17, resulting in an estimated benefit of $1,756.96 for 2024.
Additionally, the estimated year-over-year increase for 2024 VA disability pay rates, effective from December 1, 2023, is in the range of 2.8 percent to 3.1 percent based on the latest COLA estimates. The official rate is typically announced on October 13, 2023, and finalized on December 1, 2023. These figures are subject to change, and the actual adjustment may vary.
Individuals relying on Social Security or VA disability benefits should stay updated with official announcements to accurately determine their future benefit amounts.