Social Security recipients are poised to receive a more substantial cost-of-living adjustment (COLA) in the coming year than initially anticipated, as inflation continues to surge for the second consecutive month.
Social Security beneficiaries could see a COLA increase of approximately 3.2% in their monthly checks next year, a projection based on August’s inflation data. This data revealed that the consumer price index rose by 0.6% compared to the previous month and was up by 3.7% compared to the same period last year. Both figures exceed the July readings, underscoring the ongoing challenge of controlling high inflation.
The annual Social Security COLA is determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) figures from July, August, and September. In August, the CPI-W reported a 3.4% increase.
If the projected 3.2% increase materializes, it would mark a significant decrease from the 8.7% COLA adjustment received in 2023, which was the highest in four decades. Nevertheless, it would still surpass the 2.6% average increase observed over the past twenty years. This potential increase would raise the average retiree benefit, currently at $1,790, by approximately $57.30 per month.
Despite the record-high COLA adjustment in 2023, many retirees are grappling with the challenges posed by high inflation. Mary Johnson, a research analyst at the Senior Citizens League, emphasized that the dollar amount of the COLA increase remains modest, with the average monthly retiree benefit at only $1,790 in 2023.
The Social Security Administration is set to announce the final adjustment percentage in mid-October.
Impact on Beneficiaries:
In 2023, the 8.7% benefit increase consistently exceeded the actual inflation rate by roughly 2.6% every month, equating to approximately $44.90 more per month for recipients. It’s important to note that this figure does not consider the Medicare Part B premium, which is directly deducted from Social Security checks.
The standard Part B premium for this year stands at $164.90, down from $170.10 in 2022. While the Medicare Trustees projected a monthly Part B premium of $174.80 in 2024, Johnson cautioned that this estimate does not factor in “significant new costs” that may arise after the forecast, such as coverage for a new Alzheimer’s drug.
The Senior Citizens League estimates that Medicare Part B premiums may actually rise to approximately $179.80 per month. Johnson further noted that additional expenses could push Part B premiums even higher.
In summary, Social Security recipients may be in line for a more substantial COLA adjustment next year, providing some relief amid rising inflation. However, the adequacy of this adjustment in light of escalating healthcare costs remains a concern for retirees. The final percentage will be eagerly awaited in October, as it will have a significant impact on the financial well-being of millions of Americans.