Social Security 2024 COLA increase has been projected at 3.2% for the next year, according to the Senior Citizens League. No doubt this is a significant increase in income, but as compared to the previous year, 2023, it is considered a decrease of 5.5 percent from the 8.7% increase of last year’s. Social Security benefits have been based on an increase in the Cost of Living (COLA) adjustment that is measured by the Consumer Price Index since 1975 in the United States of America.
A Quick Introduction to COLA Social Security
Social Security Cola is the increase in cost of living, which is measured by the Consumer Price Index. This benefit is called COLA. COLA is the abbreviation for cost of living. Social Security is a benefit that provides a source of income when you retire or cannot work due to a disability, or it is a benefit that is given to the family of the employee after his or her death.
History of Social Security COLA
Basically, COLA is designed to provide social security benefits corresponding to inflation. So, the US beneficiaries would be able to maintain their purchasing power over time. Here’s a brief overview of some historical COLAs mentioned below
COLA from 1975 to the early 1980’s
From 1975 to the early 1980s, there was a period of high inflation in the USA. This inflation was caused by the rising price of energy. As the energy price increased during this period, the Social Security COLAs were also considered essential to be increased. This period is recorded as the highest increase ever in the history of the USA. It ranged from 5.9% to 14.3% COLA in 1980.
COLA from the Post-Early 1980’s
The social security benefit became adequate when inflation moderated during the post-early 1980s period. In this situation, the retirees have had a smaller increase in their benefits.
COLA in the year 2022
After the moderated inflation of the 1980s, it began to rise again in the early 2020s, and this increasing trend continued into the 2022s. As a result of this increasing trend, COLA had a remarkable increase as compared to the increase in previous years.
That’s why the beneficiaries had a substantial increase in their benefits. So, this increase made possible a COLA increase in the year 2022. That was considered a significant increase in COLA since 1981.
COLA in the Year 2023
Although it was a remarkable increase for the year 2022, it was a smaller increase in beneficiaries. In June 2023, inflation increased by 3% from the previous year. It was the smallest increase in a 12-month period since the end of the period in March 2021.
The price index of the shelter, which represented the growing prices of the houses and rental properties, was one of the major gains. It affected particularly the seniors with fixed salary incomes.
What will be the increase in Social Security COLA in the year 2024?
Previously, we discussed the different inflation increases for different years. In order to keep up with the price of living, retirees and beneficiaries are granted an annual increase in their Social Security benefits.
In this situation of granting, the Senior Citizens League estimated a 3.2% increase in COLA for the upcoming year of 2024.
In spite of the significant increase in income, the organization emphasizes that the given increase could not be enough to meet the needs of retirees. With rising housing costs, healthcare costs, other expenses, and even the increase in COLA adjustments, it is very difficult for retirees to maintain their living standards.
According to the advocacy group, elderly recipients are more at risk because employees who had been retired before 2000 would require an additional $500 in payments per month just to regain their purchasing power from the previous year.
For clerical employees and urban wage earners, the Consumer Price Index, which measures the inflation rate, particularly for goods and services, is used to calculate COLA.
As it compares the third quarter (July, August, and September) average CPI-W figures from the current year and the third quarter from the previous year, the increase This increasing method aids in adjusting Social Security benefits to reflect the increase in living expenses.
As the Social Security benefit increases may have an important effect on retirees’ and beneficiaries’ financial security, it is essential for them to be informed about COLA revisions.
People wish to look at additional financial planning techniques to complement their Social Security income and ensure a pleasant retirement, like personal savings and investments.
In an easy way, Social Security benefit payments can initially arise if cost-of-living adjustments for beneficiaries are calculated through the Consumer Price Index for the Elderly (CPI-E).
In the future, Social Security benefits could be decreased if this reform is implemented without Congress first ensuring financing for the Old-Age and Survivors Insurance (OASI) program.
What will be the highest amount of Social Security benefit?
In 2023, the full retirement age Social Security benefit will be $3,627. At age 70, it is $4,555 per month, and at age 62, it is $2,572. Revenues, which are full retirement age, and the exact moment of benefit collection all affect a person’s benefit amount.
Although the CPI-E broadly reflects the purchasing habits of older Americans, there is a fear among them of having greater COLA adjustments. As a result of the higher payments, which could eventually be accessed with benefits, the OASI program might have experienced financial difficulties in order to make other changes.
Therefore, it’s very important to make sure that any modifications to COLA calculations are backed by enough funds to support them and prevent any long-term unfavorable effects on Social Security claimants.
Announcement of the Social Security 2024 COLA increase
Basically, the social security benefit is announced in the month of October every year in America. The announcement for 2024 Social Security was announced on October 12, 2023, at 8:30 a.m. Eastern Time. The Administration for Social Security released the final COLA for 2024.
The Bureau of Labor Statistics’ estimate of inflation served as the basis for the third quarter of the year’s declaration. It would be the most recent information on COLA announcements by which the Social Security Administration or official sources are recommended.
To sum up the above discussion, it is very important to note that COLAs are calculated by the base line of the changes expected on the Consumer Price Index that are commonly measured by the changes that occurred in the price of goods and services.
Both clerical workers and urban employees frequently purchase these goods and services. The Social Security COLA benefits the US retiree, disabled, or dead employee family to support them in keeping pace with the changing economic changes.
Every year, the SSA announces the percentage of particular COLAs. SSA is the abbreviation for Social Security Administration. This specific adjustment is adhered to in the month of October and takes effect in January for the current year.
The SSA is responsible for providing complete details of historic COLA information, and all the beneficiaries are facilitated to check their adjustments and SS statements online through its websites.