Next year, Social Security recipients may receive a lower cost-of-living adjustment (COLA), according to new government inflation data.
The Consumer Price Index for All Urban Consumers, or CPI-U, increased 5% from a year ago and 0.1% in March, according to data released Wednesday by the U.S. Bureau of Labor Statistics.
Social Security COLA Estimate for 2024
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is used to calculate the Social Security COLA each year, increased 4.5% over the past year and 0.3% in the month preceding seasonal adjustment.
The Social Security COLA for 2024 may be less than 3%, according to an unofficial estimate from The Senior Citizens League, a nonpartisan senior organization. This is if inflation continues to fall at the current rate.
Mary Johnson, the organization’s Social Security and Medicare analyst, says that this is a remarkably rough estimate. It will be simpler to forecast the size of any price increase in 2024, if there is one, in the second half of the year.
Inflation-driven benefits increases of 8.7% for Social Security recipients in 2023 set a record for the past four decades.
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Social Security Trust Fund Projections
The Social Security Administration has recently revised its projections for how long its trust funds can continue to pay full benefits, advancing the date of depletion by one year, to 2034, due in part to the higher CPI. If Congress does not act sooner, it is anticipated that 80 percent of benefits will be payable at that time.
According to The Senior Citizens League, the 8.7% increase this year has exceeded the inflation rate in each month of 2023 by an average of 2.6%.
Since the beginning of the year, average benefits have only recovered $179.40, according to the study.
According to the nonpartisan senior organization, average benefits fell short of inflation by approximately $1,054 between January 2021 and December 2022.
As a result of Medicare Part B premiums, however, beneficiaries may not necessarily catch up this year. The fact that these monthly payments are typically deducted directly from Social Security checks, impacts the amount of the cost-of-living adjustment beneficiaries may receive.
This year’s Part B standard premium is $164.90, a decrease from $170.10 in 2022.
The 8.7% cost-of-living adjustment (COLA) has exceeded the rate of inflation every month so far this year by an average of 2.6%, according to The Senior Citizens League. This represents a monthly cushion of approximately $44.90 for an average benefit of $1,694 per month. However, the standard monthly premium for Medicare Part B, which is $164.90, exceeds the increase.
The average benefit includes those for retirees, widows and widowers, and individuals with disabilities.
Although there are indications that the Social Security COLA will be lower next year, the Medicare Part B premium may increase. According to a report released by Medicare trustees last month, the estimate for 2024 is $174.80.
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