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.

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.