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Social Security benefits will increase by 3.2% in 2024 as inflation moderates

by Andrew Wright
4 comments
Social Security COLA 2024

Social Security benefits in the year 2024 are set to witness a moderate increase of 3.2%. This adjustment, known as the cost-of-living adjustment (COLA), is considerably less than the substantial boost seen in the current year, primarily attributable to a historic 8.7% increase fueled by the highest inflation rates in four decades. The moderation in consumer prices is the driving force behind this more conservative adjustment.

According to the Social Security Administration, the typical beneficiary will see an additional sum of over $50 per month starting in January of 2024. The AARP, on the other hand, approximates this increase at $59 per month. Kilolo Kijakazi, acting commissioner of Social Security, expressed optimism about this adjustment, stating that it will aid millions in meeting their financial obligations.

Approximately 71 million individuals, encompassing retirees, disabled individuals, and children, rely on Social Security benefits as a crucial source of income.

This announcement comes on the heels of the 8.7% benefit increase observed this year, driven by record-high inflation spanning four decades, which substantially elevated the cost of consumer goods. However, with the recent easing of inflation, the forthcoming annual increase assumes a notably more modest character.

Nonetheless, advocates for senior citizens have welcomed this annual adjustment as a relief for retirees grappling with the impact of rising prices. Jo Ann Jenkins, CEO of AARP, emphasized the significance of this increase, particularly in light of the continued financial strain on older Americans as they contend with escalating expenses.

Social Security is underpinned by payroll taxes collected from both workers and employers. For 2024, the maximum amount of earnings subject to Social Security payroll taxes is slated to increase to $168,600, up from $160,200 in 2023.

Nancy Altman, president of Social Security Works, an advocacy group for the social insurance program, underscored the COLA’s importance, emphasizing the need for legislative action to safeguard and expand benefits in light of the program’s impending financial challenges.

It is worth noting that the Social Security program faces a looming financial shortfall in the coming years, as projected by the annual Social Security and Medicare trustees report released in March. According to the report, the program’s trust fund is expected to be unable to cover full benefits starting in 2033, potentially resulting in only 77% of scheduled benefits being paid if the trust fund becomes depleted. Although various legislative proposals have been introduced to address this issue, none have progressed beyond committee hearings.

A March poll conducted by The Big Big News-NORC Center for Public Affairs Research revealed widespread opposition among U.S. adults to proposals that would reduce Medicare or Social Security benefits, with 79% of respondents expressing their disapproval of reducing the size of Social Security benefits.

The COLA is calculated based on the Consumer Price Index (CPI) from the Bureau of Labor Statistics. Some advocate for using a different index, the CPI-E, which reflects spending patterns of the elderly, including expenses related to healthcare, food, and medicine. However, any change in the calculation method would necessitate congressional approval, and given the historical inaction on Social Security issues, there is skepticism regarding the likelihood of such a change being approved in the near future.

The significance of cost-of-living adjustments cannot be understated for individuals like Alfred Mason, an 83-year-old Louisiana resident, who welcomes any increase in income to help navigate the challenges posed by the ongoing high inflation rates.

Frequently Asked Questions (FAQs) about Social Security COLA 2024

What is the Cost-of-Living Adjustment (COLA) for Social Security in 2024?

The COLA for Social Security in 2024 is a 3.2% increase in benefits. This adjustment is intended to help beneficiaries keep pace with rising living expenses.

How much will the average Social Security recipient receive as a result of this COLA?

The average recipient can expect to receive more than $50 extra per month starting in January 2024. According to the AARP, this increase is estimated at $59 per month.

Why is the 2024 COLA significantly lower than the previous year’s increase?

The 2024 COLA is notably lower than the 8.7% increase observed in the current year due to a moderation in consumer prices. The previous year’s increase was driven by record-high inflation.

How many people rely on Social Security benefits?

Approximately 71 million individuals, including retirees, disabled individuals, and children, depend on Social Security benefits as a crucial source of income.

What is the maximum amount of earnings subject to Social Security payroll taxes for 2024?

In 2024, the maximum earnings subject to Social Security payroll taxes will be $168,600, an increase from $160,200 in 2023.

What are the financial challenges facing the Social Security program?

The Social Security program is projected to face a financial shortfall in the coming years. The program’s trust fund is expected to be unable to pay full benefits starting in 2033, potentially leading to a 77% payout of scheduled benefits if the trust fund is depleted.

Are there legislative efforts to address the financial challenges of Social Security?

While there have been legislative proposals to shore up Social Security, none have advanced beyond committee hearings thus far.

Is there a possibility of changing the method for calculating the COLA?

Some advocate for using the CPI-E (Consumer Price Index for the Elderly) instead of the CPI (Consumer Price Index) for calculating the COLA. However, any change in the calculation method would require congressional approval, and it remains uncertain whether such a change will be approved in the near future.

More about Social Security COLA 2024

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4 comments

JohnDoe123 October 12, 2023 - 7:38 pm

wow, big increase in SS benefit 2024, but not like 2023, why? lots of people rely on SS money, gotta fix it, right?

Reply
EconGeek87 October 13, 2023 - 4:42 am

ss inflation go up, then down, COLA calculation tricky, lawmakers gotta act soon, seniors need help, ASAP!

Reply
CryptoKing123 October 13, 2023 - 6:28 am

interesting, SS linked to inflation, reminds me of crypto volatility, both unpredictable!

Reply
CarEnthusiast45 October 13, 2023 - 11:39 am

not just finance, car market affected too, wonder how auto industry coping, need more data!

Reply

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