Beneficiaries will receive a 3.2% boost in their Social Security benefits for cost of living adjustment 2024, as announced by the Social Security Administration.
Over 71 million Social Security and Supplemental Security Income beneficiaries will be impacted by the annual cost of living adjustment 2024. These adjustments, occurring annually, ensure benefits stay in step with inflation.
The cost of living adjustment helps maintain the purchasing power of Social Security benefits, so it remains relevant in the face of rising living costs.
Average $50 monthly increase in retirement benefits for 2024
On average, the estimated increase in Social Security retirement benefits amounts to $50 monthly due to the change.
As per the Social Security Administration, workers’ average monthly retirement benefit will rise to $1,907.
This marks an increase from the current year’s average of $1,848. The majority of Social Security cost of living adjustment 2024 beneficiaries will experience higher monthly payments commencing in January.
SSI beneficiaries will notice the increase in their checks as early as December.
Social Security Cost of Living Adjustment for 2024 Tied to the Medicare Part B Premiums
The extent of the Social Security check increase for retirees hinges on the yet-to-be-revealed 2024 Medicare Part B premium.
Usually, Medicare Part B premiums are subtracted from Social Security payments.
The Medicare trustees have estimated a potential increase in the average monthly premium, forecasting it to be $174.80 in 2024, a rise from $164.90 in 2023.
The increase in the cost of living adjustment for 2024 benefits is notably smaller than this year’s 8.7% cost of living adjustment.
This 8.7% adjustment was the largest in four decades, primarily in response to record-high inflation.
Additionally, it falls short of the 5.9% cost of living adjustment implemented in 2022.
The Senior Citizens League, a nonpartisan senior organization, reports an average 2.6% cost-of-living adjustment in the past two decades.
The 3.2% increase in cost of living adjustment for 2024 aligns with a prediction made by The Senior Citizens League last month.
Understanding the calculation for cost of living adjustment 2024
Social Security’s cost of living adjustment relies on the CPI-W, measuring inflation for urban wage earners and clerical workers.
The calculation involves averaging third-quarter data and comparing it to the previous year’s third-quarter average.
If an increase is detected, it determines the size of the COLA for Social Security beneficiaries.
The 2024 change arrives as numerous retirees grapple with elevated living costs.
AARP CEO calls for Bipartisan Action on social security amid inflation concerns
Jo Ann Jenkins, CEO of AARP, mentioned that retirees can take solace in the forthcoming increase in their Social Security payments to cope with inflation.
She acknowledged that older Americans continue to be financially impacted while purchasing groceries and fuel.
Jenkins urged Congress to take bipartisan measures to ensure the strength of Social Security, which confronts a funding gap within the next decade.
Some proposals to resolve the program’s issues have even suggested altering the method for calculating the annual cost-of-living adjustment.
Advocates propose that the CPI-E could better reflect seniors’ expenses and protect their buying ability.
Research indicates that using the CPI-E may not necessarily result in a more significant annual increase in benefits.
Tracey Gronniger, from Justice in Aging, shared her satisfaction regarding the boost of cost of living adjustment 2024, emphasizing its importance in the fight against senior poverty.
She cautioned that the rise might not adequately address the needs of impoverished seniors.
According to Gronniger, the increase doesn’t fully alleviate the challenges of affording housing and healthcare.
Challenges and tax implications of increased social security benefits
The Senior Citizens League warns that increased Social Security benefits have exposed low-income beneficiaries to potential SNAP and rental assistance loss.
Some individuals may experience their Social Security income becoming taxable for the first time or facing increased taxation.
Taxes on this income could rise, and up to 85% of benefits might be subject to taxation.
Certain income thresholds, which are not adjusted for inflation, determine the taxation of Social Security benefits.
Senior Citizens League policy analyst Mary Johnson noted that Social Security typically replaces 30% or less of pre-retirement earnings.
She emphasized that Social Security was not designed to offer substantial generosity in terms of financial support. Johnson described it as a relatively modest source of income for retirees.