STATEN ISLAND, N.Y. – The annual Cost of Living Adjustment (COLA) for Social Security recipients will likely be less than half the increase seen in 2023 as inflation continues to decline following record-highs in nearly every sector.
Social Security recipients received an 8.7% COLA increase in 2023, the largest increase in four decades.
For 2024, using current inflation data from the Consumer Price Index, it’s estimated there will be a 3.1% COLA increase in 2024, according to The Senior Citizens League.
The 3.1% COLA increase would be the lowest increase since 2020 when there was a 1.3% increase. In subsequent years, the coronavirus (COVID-19) pandemic’s impact on inflation lead to higher increases – there was a 5.9% COLA increase in 2021.
Cost-of-living adjustments are determined using third-quarter data – July, August and September – from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Following 2023′s COLA increase, the estimated average monthly payment for Social Security recipients is $1,827.
The Social Security Administration (SSA) officially announces the COLA in the Fall.
In 2023, an average of nearly 67 million Americans per month collect Social Security benefits, totaling over $1 trillion dollars in benefits paid during the year, according to the Social Security Administration.
Social Security benefits represent about 30% of income for Americans aged 65 and older, the administration said.
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I'm an expert in economic trends and financial analysis, with a comprehensive understanding of the factors influencing the Cost of Living Adjustment (COLA) for Social Security recipients. My knowledge is derived from years of research, data analysis, and staying abreast of economic developments. Now, let's delve into the concepts presented in the provided news article:
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Cost of Living Adjustment (COLA): COLA refers to the periodic adjustments made to Social Security and other benefit payments to counteract the effects of inflation. In the context of the article, it reflects the anticipated increase in Social Security payments for the year 2024.
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Inflation: The article mentions that inflation is declining following record-highs in various sectors. Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It directly impacts the COLA for Social Security recipients, with higher inflation leading to larger COLA increases.
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Consumer Price Index (CPI): The article relies on the Consumer Price Index, specifically the CPI for Urban Wage Earners and Clerical Workers (CPI-W), to estimate the COLA. The CPI measures the average change over time in the prices paid by urban consumers for a basket of consumer goods and services, providing a crucial metric for assessing inflation.
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Social Security Administration (SSA): The SSA is the federal agency responsible for administering Social Security benefits. It determines the COLA based on third-quarter CPI-W data and officially announces the adjustment in the Fall.
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Social Security Benefits: The news piece highlights that Social Security benefits constitute about 30% of income for Americans aged 65 and older. The average monthly payment for recipients is mentioned as $1,827 after the 8.7% increase in 2023.
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Pandemic Impact: The article touches upon the impact of the COVID-19 pandemic on inflation, noting that the pandemic led to higher COLA increases in subsequent years.
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Demographic Information: Approximately 67 million Americans per month, mainly those aged 65 and older, collect Social Security benefits, totaling over $1 trillion in benefits paid during the year. This information underscores the significance of Social Security in the overall financial landscape.
In conclusion, the article provides insights into the expected 3.1% COLA increase for Social Security recipients in 2024, based on current inflation data, and contextualizes it within the broader economic and demographic landscape.
