Seniors on Social Security were thrown a major bone at the start of 2023, when their benefits rose 8.7%. That cost-of-living adjustment, or COLA, was the largest one to arrive in decades, and it was spurred by the rampant inflation that plagued consumers throughout 2022.
At this point, Social Security recipients are really eager to know what 2024’s COLA will look like. And they won’t have to sit tight too much longer.
On Oct. 12, the Bureau of Labor Statistics is scheduled to release September’s Consumer Price Index (CPI). That report will include data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a subset of the CPI.
Once that information comes in, the Social Security Administration (SSA) will be able to calculate a COLA for 2024. It typically makes that announcement right away, which means that come Oct. 12, Social Security recipients should be in the know. But whether they end up happy with next year’s COLA is a different story.
A smaller raise is expected
Let’s get one thing out of the way — 2024’s Social Security COLA won’t come close to the raise seniors received at the start of 2023. At this point, 2024 COLA estimates are generally coming in within the 3% to 3.5% range.
Historically speaking, that’s actually not so low for a COLA. Rather, it’s that seniors’ most recent point of comparison is 8.7%, so a raise in the 3% range is apt to seem stingy, even if it’s not.
Of course, it’s important to remember that since COLAs are pegged to inflation, a smaller raise is also an indication that living costs have come down. That’s apt to be a source of relief for seniors who get the bulk of their retirement income from Social Security.
The wild card factor will be Medicare Part B
No matter what 2024’s Social Security COLA ends up being, seniors should be aware that a hike in Medicare Part B premiums has the potential to whittle that raise down. Seniors who are enrolled in Medicare and Social Security at the same time have their Part B premiums deducted from their benefits automatically. So if Part B gets a lot more expensive, seniors will see even less from their 2024 COLA.
In 2023, the cost of Medicare Part B actually went down. That’s not expected to happen for 2024. In fact, estimates from earlier this year had the cost of Medicare Part B rising from $164.90 (the standard monthly premium now) to $174.80 next year. So all told, seniors will need to wait on not just an announcement from the SSA on next year’s COLA, but also for an update on Medicare premium costs.
All told, Oct. 12 is apt to be a big day for anyone who collects Social Security. In addition to a 2024 COLA announcement, the SSA will put out a fact sheet on other changes to the program, like what the wage cap looks like and what the earnings test limit will entail for Social Security recipients who work and collect benefits at the same time. So clearly, it’s a good day to read or listen to the news and be on the lookout for important information.