Benefits will increase for Social Security claimants as they will receive a 3.2% cost of living adjustment. However, the rise may not even be effective in keeping up with inflation; it is only intended to maintain pace with it. You will receive a larger Social Security benefit the following year if you are a retiree. It may seem wonderful to see more money arrive in your bank account, and it’s a good thing that payments are increasing.
Social Security COLA Of Previous Years
But in reality, there’s nothing to celebrate about getting this extra cash. And the reasons behind that are as follows. The first major reason you may be unhappy with your benefit increase is that it will be much smaller than the hikes you have been given in the previous several years. Social Security COLA was 5.9% in 2022 and 8.7% in 2023. It is only 3.2% for 2024. Although this is a hefty COLA by historical standards, those who have just retired and seen a significant increase in their benefits may be disappointed to learn that when this COLA takes effect in the new year, they won’t receive nearly as much extra.
There’s another reason retirees might not be happy with their COLA. It’s unlikely that they will even notice the full 3.2% rise in their payout. This is because Medicare Part B premiums are usually deducted from Social Security for the elderly. And in 2024, those premiums will increase. In 2023, the normal premium is $164.90; by 2024, it will rise to $174.70. This $9.80 increase will immediately be deducted from the COLA’s monthly benefit increase. In 2023, if your Social Security benefit was $1,600, and you received a 3.2% rise, the COLA would only provide you with an additional $51.20 a month.
Additional Amount Of Social Security Benefits In 2024
You will only receive $41.40 extra per month after deducting $9.80 from that amount. That won’t change your life, but it also isn’t nothing. Finally, there’s one more reason to be unimpressed with a little increase in Social Security benefits. The unfortunate truth is that this isn’t a “raise” in the traditional sense that is, one intended to raise your pay and improve your standard of life. Rather, it’s merely intended to assist you in keeping up with growing costs. Based on how much a basket of goods and services prices have increased, the COLA is determined. The CPI-W is used to calculate the rate of price increase.
Social Security COLA Might Increase In 2024
Therefore, the COLA is intended to raise your benefit to a point where you can maintain your current level of spending not to improve your purchasing power. Unfortunately, the COLA frequently fails to provide elders with the necessary protection against the negative effects of inflation since seniors’ spending patterns differ from those of clerical workers. Indeed, according to the Senior Citizens League, the purchasing power of Social Security income has decreased by around 40% since 2000. Therefore, seniors should expect a modest boost in benefits, most of which will go into paying for Medicare and likely not enough to offset the actual price increases they experience while having more money in your check might feel nice at first, there is ultimately nothing to celebrate.