Every year in mid-October the United States government announces the Cost of Living Adjustment (COLA) figure for next year’s Social Security benefits. This COLA is not just for Social Security checks, as there are other elements of the American economy that see an increase in their numbers thanks to this annual increase.
However, Social Security retirees take this more into account due to the fact that more often than not, the retirement check is the only source of income. With this in mind it is easy to understand why some beneficiaries are wondering if the COLA 2024 increase will be enough to combat inflation in its entirety.
Truth be told, the purpose of the COLA is indeed that, to combat inflation. But we must keep in mind that the United States government has to be realistic about Social Security benefit increases. In order to balance the economy it cannot put in a huge increase if there is no justification.
In the 2023 COLA we could see that the increase in benefits was 8.7%, reaching a record high. This was because inflation was also record high, so fighting it became difficult for retirees. In this case, inflation seems to have stalled and the government has decided a COLA of 3.2% is enough for retirees. will it really be enough for them?
IS THE 2024 COLA OF 3.2% ENOUGH FOR SOCIAL SECURITY BENEFICIARIES?
If we check the increase in inflation over the last few months, 3.2% does seem like a fair COLA for Social Security beneficiaries. However, this could be very different in the event that prices rise in the coming months. In the event that inflation spikes before the end of the year, retirement checks with the 3.2% increase will be more than insufficient.
As usual, the increase in the CPI-W in the months of July, August and September was taken into account in calculating the COLA. The average price increase in these months was 3.7%, which resulted in the 3.2% COLA. Still, even President Biden himself has stated that to be fairer to retirees the government should take the CPI-E instead of the CPI-W.
But we must keep in mind that the reality is what it is and retirees will have to face all the increases between now and the end of the year with this COLA increase. However, if we collect just the Social Security check it could be more than insufficient, although we can always apply for some extra benefit such as Supplemental Security Income or SNAP Food Stamps.
HOW MANY DOLLARS WILL PENSIONS INCREASE WITH THE COLA 2024?
Since the COLA increase is through a percentage, each of the Social Security checks will increase differently. This means that a $1,200 check will not go up the same as a $3,000 check. While this seems fair, since it goes up to all checks equally, retirees with a lower payment may not have enough money for their expenses.
The 3.2% increase will bring the maximum check of $4,555 per month to $4,700 per month. Therefore, we would be looking at an increase of almost $150, something that can be very significant in this case. But in the case where we have a check of around $1,000 the increase would be only $32, so the $1,032 payment seems insufficient.
Regardless of the type of Social Security benefit you have or the amount you will see a 3.2% increase. This will be true without any conditions. Also, to get the COLA you don’t need to do anything, as it is an automatic process. Just by having an accepted benefit you will be able to have the COLA added as of January 2024.
