Social Security beneficiaries could anticipate a substantially smaller COLA for 2024 as the rate of inflation keeps dropping. Based on updated CPI data for June published on Wednesday, The Senior Citizens League, a neutral senior group, has revised its estimate of the Social Security COLA, which may be 3%.
Inflation Decreased To 3% In June
After peaking at 9.1% in June 2022, annual inflation dropped to 3% in June, down from 4 percent in May. Additionally, it was the smallest rise since March 2021, primarily as a result of a 16.7% drop in energy prices. Despite being down from May’s 6.7% annual increase, food prices rose by 5.7%. Rents, which are included in the shelter, increased 7.8% over the previous year, which was still less than May’s 8% increase. People are generally happy to see lower inflation because their purchasing power is returning.
Due to modifications to the standard monthly rate of price increases, the projection is greater than the 2.7 percent increase for 2024 that the group predicted last month, as per Mary Johnson, a Medicare and Social Security policy expert at The Senior Citizens League. Separately, on Wednesday, the Committee for a Responsible Federal Budget released its projection of the Social Security COLA, which predicts a 2.6% to 3.3% increase in benefits for 2024.
Net Inflation In 2024
The public policy group concentrating on the national budget as well as fiscal issues predicts a 3.3% increase if current inflation patterns continue. If there is no further gross inflation for the remainder of the year, the increase would be lower at 2.6%. Benefit increases anticipated for 2023 would be less than the 8.7% increase beneficiaries experienced in 2023, which was the largest increase in four decades. Beneficiaries experienced a 5.9% increase in 2022, which was a record high at the time.
Social Security COLA In 2023
Starting in January, the average Social Security payout increased by more than 140 dollars per month, according to figures from the SSA. About 70 million beneficiaries of Supplemental Security Income, also known as SSI, received the boost. The cost-of-living adjustment’s goal is to guarantee that benefits increase at the same rate as inflation. In 1981, there was a 14.3% COLA, which is the highest amount ever. Other years, like 2010, 2011, and 2016, saw no increases in benefits for beneficiaries.
Calculation Of Social Security COLA
The yearly COLA is determined by the SSA using a portion of that index, CPI-W. The shift in percentage in the CPI-W during the 3rd quarter of the previous year to the 3rd quarter of the present year is the basis for the COLA. There won’t be a COLA when there is no rise. Johnson pointed out that it seems improbable that the COLA will be zero in the next year. Each month since the raise began in January, the 8.7% COLA has surpassed CPI-W growth over the prior year. The CPI-W is increased by 2.3% over the past 12 months, according to the most recent June figures.
In comparison, the 5.9% increase in benefits in 2022 largely lagged behind inflation. The cost-of-living adjustment, however, may not always correspond with the price increases that retirees and other recipients personally experience. According to a study by The Senior Citizens League, almost 53% of recipients claim that their real expenses have increased by more than the amount of their COLA increases.