2024 Social Security COLA Announcement

October 11, 2023 | Author: Goretti Garcia

With the last-minute resolution of a potential government shutdown that could have delayed the COLA (cost of living adjustment) announcement, the path is now clear for the Social Security Administration to unveil the official 2024 COLA on the morning of October 12. The latest forecast predicts a 3.2% increase, which is significantly lower than the 8.7% inflation-driven bump we saw in 2023. Given this year's decelerating inflation rates, it is anticipated that the 2024 COLA will be considerably smaller than the record-breaking 8.7% increase witnessed in 2023, resulting in an average monthly Social Security payment hike of $146.

The annual adjustment is determined by utilizing the CPI Index for Urban Wage Earners and Clerical Workers (CPIW). To arrive at this adjustment, the changes in the CPI-W for the months of July, August, and September are aggregated and then averaged. Then, this average is compared with the Q3 average from the prior year. The difference between the two figures is the amount of the next year’s COLA. In a pre-September data release forecast based on CPI-W data, Mary Johnson of The Senior Citizens League predicted a 3.2% COLA for 2024. If this prediction holds true, it will increase the average monthly retirement benefit of $1,790 by $57.30—almost $90 less per month than the 2023 increase. Mary Johnson noted in a TSCL newsletter addressing the 2024 COLA situation, "Inflation isn't going down; it's just slowing. Although prices aren't increasing as fast as a year ago, prices are still higher than one year ago." A 3.2% increase would be quite lower than the 8.7% increase received in 2023. However, it would still be significantly higher than the 2.6% average increase beneficiaries have received over the past two decades.

Potential increase in Medicare Part B

Seniors enrolled in Medicare and Social Security have their Part B premiums deducted from their monthly Social Security payments. It's important to mention that the potential increase in Medicare Part B premiums for 2024 could offset any gains from the Social Security COLA raise. While the cost of Medicare Part B slightly decreased for 2023, a decrease is not expected for 2024. In 2023, monthly Medicare Part B premiums were $164.90, with an annual deductible of $226. Although the Centers for Medicare & Medicaid Services (CMS) has not officially announced the 2024 Part B costs, the Medicare Trustees report from March forecasted a 6% increase, nearly $10, raising the monthly deductible to $174.80 in 2024. The Senior Citizens League notes in a recent newsletter that this estimate does not include any significant new costs that may arise after the estimate is released. One significant potential cost is Medicare's coverage for a new Alzheimer's drug. In total, TSCL suggests that most beneficiaries may see their Part B premiums increase by approximately $15 per month from 2023.