Social Security recipients will notice a 3,2% COLA increase in 2024!
If you’re a Social Security recipient, I have amazing news for you: there will be a 3.2% increase in Social Security income in 2024. The new measure will start in January, and it will increase the average monthly retirement benefit that consumers will receive by almost $50. These increases are known as cost-of-living adjustments or COLA.
According to the Social Security Administration, Social Security recipients will begin receiving the higher benefits on December 29th, 2023. Even though $50 might not seem like much for some people, that money can help millions of people keep up with expenses, pay the bills, or take better care of their families.
The COLA increase in 2024 was calculated based on an average of the inflation figures for July, August, and September. Moreover, this yearly adjustment is based on the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
In July, August, and September 2023, the CPI-W increased by 2.6%, 3.4%, and 3.6%, respectively. But the year 2024 will bring some benefits to retirees who rely on their Social Security checks, especially since inflation doesn’t seem to go away any time soon.
The COLA increase in 2024 will be a huge help for millions of people in the United States, especially retirees who feel the sting when they purchase gas and groceries. Every dollar counts, especially in the uncertain times we live in today.
If you want to find out more about the COLA increase in 2024, keep reading, because we have some things to share with you!
2000 vs 2024
The Senior Citizens League, another organization that advocates for senior citizens, strongly mentioned that higher increases are necessary, particularly for older retirees who have a hard time paying their bills and surviving without the proper amount of money.
Officials from the organization added that, compared to Social Security payouts, the costs of the products and services they require are increasing far more quickly due to the major problems the world is facing.
According to the group, there’s a huge discrepancy between the purchasing power that people who retired in the 2000s or before that period had compared to retirees nowadays. For them to regain their purchasing power, they would require an extra $500 in benefits per month.
According to the Social Security Administration, around 67 million people were receiving Social Security payments in 2023. As of June 30th, 2023, about 90% of those over 65 received these payments, which means that most of the recipients are retirees.
COLA increase 2024: how it works
As we’ve previously said, one of the main problems in the financial world nowadays is inflation, which rocketed to 40-year highs in 2022. This was caused by multiple factors, including pandemic stimulus payouts, rising shopping and spending, and widespread supply chain problems.
The Federal Reserve responded to these issues by quickly raising interest rates. The current benchmark interest rate in the United States is the highest in over two decades, which is beyond crazy if you think about it.
Even though the economy has slowed down a little in 2023 compared to the previous year, inflation is still higher than it was in the 2010s, and everyone, young or old, is deeply affected by its consequences.
You’re probably curious how the COLA increase in 2024 was calculated, and the formula is rather simple: the SSA calculates the percent change between average prices in the third quarters of both the current and previous year.
You’re probably asking why the fourth quarter isn’t used since it’s also part of people’s lives, but the reason why they don’t consider it when it comes to calculating these adjustments is because the SSA needs to have the final adjustments on January 1st, and the U.S. Bureau of Labor Statistics usually does not release that amount until mid-January.
Due to excessive inflation, the 2023 COLA was 8.7%, the highest since the 1981 adjustment of 11.2%. According to SSA officials, the Social Security benefits increased by over $140 per month in January 2023.
Don’t forget to check your mail in December
As the officials from the SSA said, Social Security beneficiaries will start receiving notices of the COLA increase in 2024 as early as December.
People who have a personal My Social Security account can access their COLA increase in 2024 notice online and configure text or email alerts for new messages regarding COLA, according to the government. However, they have to do so by November 14th.
Moreover, the SSA said that there will be some changes regarding Medicare in 2024, and people interested can find everything they need to know on the following website: www.medicare.gov.
Even though there will be a COLA increase in 2024, you still need to keep track of your expenses so you know exactly where each dollar goes. If you have a hard time doing so, I recommend you check out this fantastic budget planner (it helped me a lot)!
COLA increase in 2024: how to calculate your Social Security
If you want to estimate how much your Social Security benefits will be, thanks to this COLA increase in 2024, the formula was shared by a certified financial advisor. According to him, there are two ways you can approximate how much money you’ll get, and we’ll talk about both in the following minutes.
Here’s the first method: if it’s deducted from your check, add back your monthly Medicare Part B premium to the amount of your current Social Security check.
The typical monthly Part B premium in 2023 is $164.90, but higher-income recipients, such as single people earning over $97,000 and married couples earning over $194,000, have to pay extra.
When you’re done with the sum in the previous step, apply the COLA to the entire benefit, which includes the amount of taxes withheld. Then subtract the new Medicare Part B premium for 2024, along with the taxes at the rate you have withheld. Experts say that in 2024, the usual monthly Part B premium will be $174.70.
Keep in mind that people who earn more than $103,000 per year and married couples earning more than $206,000 per year will be required to pay more. There you have it; that should be a good approximation of how big your Social Security check will be in the upcoming year.
The second method you could use to see your Social Security benefit due to the COLA increase in 2024 is by multiplying the monthly benefit you currently receive by 1.032. While it won’t be an easy task, it would be a rough calculation.
We have one more thing to talk about regarding the subject of the COLA increase in 2024, so keep reading!
COLA increase in 2024
The maximum benefit for a retired worker who claims their Social Security benefits at full retirement age will increase from $3,627 per month in 2023 to $3,822 per month in 2024.
Moreover, according to the SSA, the average benefit from all retired workers will increase from $1,848 in 2023 to $1,907 in 2024. It’s not that long until you get your note about the COLA increase in 2024 in your mail, so be patient and hope that 2024 is going to be a better year in terms of finances.
What do you think about the COLA increase in 2024? Inflation was and still is a big challenge for plenty of us, and we’re curious to know what you think. If you want to share your thoughts with us, feel free to do it in the comment section below!
Until next time, if you want to read something else from Easy Seniors Club, here’s an amazing post for you to check out: 10 Worst States to Retire In if You Want to Save Money on Taxes