The record 8.7 percent COLA that retired workers received in 2023 was the biggest benefit boost for this group in more than 40 years. This additional income surely provided a much-needed lifeline and has the potential to help people regain the spending power they lost the prior year. There is a drawback to this advantageous growth, though. Regrettably, recipients of Social Security will probably see a noticeably lesser rise in benefits next year as a result of the successive implementation of two relatively big COLAs in back-to-back years. On the plus side, Social Security COLA may be a little more than expected.
Social Security Benefit; Source- MARCA
Expected Social Security COLA Of 2024
A 2.7 percent COLA for Social Security is expected in 2024, according to the TSCL, a nonprofit group that advocates for senior problems. However, TSCL has updated its prediction to three percent in light of the BLS release of June inflation statistics. If the updated estimate from TSCL is accurate, the median retired worker collecting Social Security benefits would have to pay an extra $55 per month. The average beneficiary who has a disability would also see a raise in their monthly payments of about $45 as well as $44, correspondingly, in the upcoming year.
Lesser Amount Of Social Security Benefits In 2024
However, there is a drawback to this circumstance as well. Despite the possibility of a bigger adjustment in 2024, a sizeable fraction of recipients may not receive a net gain that is significant, or may even see no gain at all, as a result of a significant increase in Medicare Part B premiums. A great deal of Social Security recipients contribute monthly deductions toward the cost of Medicare Part B, which pays for outpatient services. It’s important to note that Part B premiums significantly fell in 2023, the 2nd time in a hundred years that this has happened. However, Part B rates often increase each year as a result of the rising prices of name-brand pharmaceuticals.
Estimation Of Social Security COLA By CPI-W
The CPI-W is a gauge of how prices have changed on average for an economic basket of goods and services purchased by urban workers and office workers. The Bureau of Labor Statistics (BLS) computes it, and it is released each month. The weights used to construct the CPI-W have been determined on the spending habits of city wage earners as well as clerical workers, and they represent the prices for a basket of products and services that are often purchased by these individuals. The COLA for Social Security payouts as well as SSI payments is computed using the CPI-W. The CPI-W is a gauge of how prices have changed on average for a market cart of goods and services purchased by urban laborers and office workers. Although the COLA for 2024 is still under wraps, the CPI-W rose 2.6% in the year that ended in July 2023. If inflation keeps increasing at this rate, the COLA in 2024 would be roughly 2.6%. The BLS first chooses a sample of urban-area homes.
