Social Security payments to increase in 2024, says new estimate.
Higher Inflation Numbers Expected to Boost Social Security Payments in 2024
In August, the Senior Citizens League predicted a 3 percent cost-of-living adjustment (COLA) for Social Security benefit payments in 2024. However, with the release of higher-than-anticipated inflation numbers, the estimated COLA has now been raised to 3.2 percent. This means that the average recipient can expect an extra $57 in benefits, bringing their total to around $1,790. While this increase is lower than the record-breaking 8.7 percent COLA received in 2023, it is still higher than the average over the past 20 years.
The Social Security Administration is set to announce the official COLA for 2024’s benefits in October, with the increased payments taking effect in January. The decision is based on the Consumer Price Index (CPI), which measures inflation during the months of July, August, and September.
Seniors Struggle to Keep Up with Rising Inflation
Despite the significant COLA increase in 2023, retirees have been unable to recover from the losses caused by recent high inflation. Inflation reached 40-year highs in mid-2022 due to various factors, including trillion-dollar spending packages, supply-chain issues, high gas prices, and the aftermath of the pandemic. Inflation has remained stubbornly high in 2023, making it challenging for seniors to keep up with rising costs.
Medicare Premiums and Future Rate Changes
It’s important to note that the estimated COLA figures do not include the anticipated rise in Medicare costs. The federal Centers for Medicare and Medicaid Services will announce Medicare premium adjustments in the fall. The Senior Citizens League warns that other costs may drive monthly premiums up even further.
Furthermore, Federal Reserve Chairman Jerome Powell has indicated that the central bank may need to raise interest rates further to combat inflation. The Fed has already raised rates by 5.25 percentage points since March 2022. Economists predict that the Fed will start lowering rates by the middle of 2024.
Additional Resources:
- When You Must Pay Taxes on Social Security Benefits – August 30, 2023
- Millions of Americans Get Bigger Social Security Payments as Cost-of-Living Adjustment Kicks In – January 2, 2023
What factors have contributed to the unexpected rise in inflation, leading to the projected 3.2 percent COLA adjustment for Social Security benefits in 2024?
To announce the official COLA adjustment in October, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of 2023. This index measures the changes in prices of goods and services typically purchased by workers and clerical employees in urban areas.
The anticipated 3.2 percent COLA for 2024 is a result of the unexpected rise in inflation observed in recent months. Inflation, which refers to the general increase in prices of goods and services, has been on the rise due to various factors such as supply chain disruptions, increased demand, and rising energy costs.
The higher-than-expected inflation numbers have a significant impact on Social Security payments. The COLA is designed to help beneficiaries keep up with inflation and maintain their purchasing power. With the estimated 3.2 percent increase, Social Security recipients can expect a modest boost in their monthly benefits, providing some relief against the rising cost of living.
While the additional $57 may not seem like a substantial increase, it can make a difference for individuals on fixed incomes who heavily rely on Social Security for their livelihood. The average monthly benefit is projected to reach around $1,790, offering recipients some breathing room in meeting their day-to-day expenses.
It is worth noting that the 3.2 percent adjustment is lower than the extraordinary 8.7 percent increase witnessed in 2023. However, it is still higher than the average COLA over the past two decades, which has hovered around 2 percent. This indicates that, despite the lower increase compared to the previous year, Social Security beneficiaries will still fare better than in previous periods.
The Senior Citizens League, a non-profit organization that advocates for the rights and well-being of older Americans, has welcomed the expected increase in Social Security benefits. They acknowledge that even a small adjustment can provide much-needed relief to seniors struggling with rising healthcare costs, housing expenses, and other basic necessities.
It is crucial to remember that the official announcement regarding the COLA adjustment for 2024 is yet to be made. The Social Security Administration will release the final figure in October after analyzing the CPI-W data. Recipients eagerly await this announcement as they plan their budgets and adjust their expectations for the upcoming year.
In conclusion, the higher-than-anticipated inflation numbers have led to an increase in the projected COLA for Social Security benefits in 2024. While the 3.2 percent adjustment may not reach the levels seen in the previous year, it is still higher than the average over the past two decades. This adjustment will provide some relief to seniors managing their expenses and will help individuals on fixed incomes maintain their purchasing power. The official announcement in October by the Social Security Administration will provide certainty and allow beneficiaries to plan accordingly for the year ahead.
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