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Estimated 2024 Social Security COLA Might be Lower Than You Hoped

Estimated 2024 Social Security COLA Might be Lower Than You Hoped

July 20, 2023

In January 2023, Social Security beneficiaries enjoyed one of the largest cost of living adjustments (COLA) in history. The 8.7 percent bump in payments came in response to significant inflation rates during 2022, and retirees were relieved to find a bit more room in their budgets.

Many were also left wondering if the dramatic increase might mark the beginning of a trend, and whether Social Security would release a similarly substantial COLA in 2024.

We have some good news and some not-so-good news. The good news is that inflation has cooled off, and that rates remain at a more modest level according to the Consumer Price Index for Urban Wage Earners and Clerical Workers (known as the CPI-W). In the past year, the CPI-W has recorded a 4.0 percent inflation rate, but that rate was down to just 0.1 percent in May. We’re all happy to see inflation slowing, because the rising costs of things like gas and groceries were impacting all of our budgets.

Of course, the not-so-good news is that, because Social Security COLA is tied to the inflation rate, the payment increase in 2024 is not likely to be as large as it was this past January.

The Senior Citizens League, which monitors inflation rates and Social Security closely, has predicted a 2.7 percent COLA for 2024. While the organization does not actually determine COLAs (the Social Security Administration does that), their predictions in past years have usually proven fairly accurate.

We won’t know the 2024 COLA for sure until October, when Social Security announces it. But unless the inflation rate changes drastically during the next two months, we can probably count on next January’s payment increase being more modest than the one we saw this past January.

As always, contact our office if you have any concerns about your retirement income, or if you want to make adjustments to your plan. Together we will review your expected budget and identify all of your retirement planning options.