The Social Security Administration (SSA) is already preparing to send larger checks to millions of Americans. As of August 2023, the average check is about $1,840 so you may receive about 60 dollars extra in January 2024.
The new COLA increase may be revealed on October 12 by Social Security. Therefore, it will not be clear until that day the exact amount of money beneficiaries could receive in 2024.
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Undoubtedly, it will be a relief for nearly 67 million Americans who get Social Security. Even if it means getting more money, some believe it is not enough to make ends meet.
Why does Social Security increase benefits every year?
The Social Security Administration increases benefits so that recipients do not lose their purchasing power. Otherwise, beneficiaries will get the same money but could buy fewer things.
The Administration calculates the new COLA taking a few things into account. SSA uses the average inflation rate of three months. That is the average inflation rate in July, August, and September.
Then, SSA compares the figures in this period, the third term of the year, with the same period in the previous year. By comparing inflation in the third term of 2022 and 2023, they work out the new Cost of Living Adjustment for 2024.
Bear in mind that in order to figure it out, SSA needs the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA increase has not been with us forever, SSA has used it since 1975.
While some beneficiaries may receive about $60, others with lower benefits may receive much less. For example, if you are on Supplemental Security Income (SSI).
Those on SSI can get up to $914 in 2023, which could be about $943 in 2024. Therefore, they may get half of what those with an average retirement check could get. If you get a check worth $4,555, you may get about 145 dollars extra, about $4,700.