The Social Security check is just a few days away, and beneficiaries are already sitting on the edge of their seats, anxiously awaiting its arrival. They are also waiting for the announcement of the next cost-of-living adjustment (COLA) for the upcoming year 2024. This is scheduled to be launched on October 12.
Thus, forecasts indicate that this year’s COLA is expected to be approximately 3%. This percentage would represent a substantial drop compared to the historically high adjustment of 8.7% that has been observed this year. Despite these circumstances, there is a possibility that the COLA could fall below 3% in the event that the September inflation rate turns out to be exceptionally low.
The COLA calculation depends on these factors
When talking about the cost-of-living adjustment, it is important to know that its official calculation depends on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year. In this sense, the changes in the East for the months of July, August and September are combined, averaged and, subsequently, a comparison is made with the average for the third quarter of the previous year.
The result shows a percentage difference that dictates the COLA amount, which will be reflected in the Social Security checks that will become official as of January 2024.
What recent inflation reports indicate is a year-over-year increase of 2.6% in CPI-W. Conversely, as a result of a slightly higher monthly inflation rate, most estimates put the 2024 COLA at around 3%. For its part, the Senior Citizens League projects that a COLA of 3% would increase the average monthly Social Security benefit by $53.70.
In addition, there may be an option for it to increase even more as a result of severe hurricanes. Such storms tend to affect oil and gas production and distribution, which drives up gas prices, an integral component of the inflation index used to calculate the Social Security COLA.
Knowing this, researchers have predicted a 60% chance of an “above normal” Atlantic hurricane season and this could affect, to an even greater extent, the COLA.
Concern for Social Security Check Recipients
While an increase in the COLA is positive news for all Social Security check recipients, it also has potential repercussions for the general population. On this, financial expert Aaron Crowe has weighed in: “While it’s great news for seniors to receive an increase in their Social Security checks, it’s important to remember that this increase is tied to inflation,” he noted.
“If inflation is high,” he adds, “then it is likely that prices for goods and services will also be high, which can make it difficult for seniors on fixed incomes to make ends meet.”
Given that this uncertainty is already a real problem in the U.S., retirees affected by it should begin to consider taking steps to protect their retirement from the U.S. recession. To that end, such measures include embracing frugality and exploring additional income opportunities.
As financial advisor Kevin Gallegos has suggested, “Retirees should consider working part-time or starting a small business to help supplement their retirement income.”
Those benefiting from the 2024 Social Security check increase
Despite these negatives, it is a reality that the COLA increase is also going to mean an increase in terms of Social Security payments of, as mentioned above, 3.2%. Referring to this, it is very useful for each of the groups that are recipients of this assistance and will therefore benefit from it, to be aware of the new average payments that are expected in the year 2024.
As for retirees, their $58 increase leaves the average check amount at $1,885. Disabled workers‘ payments will increase by $47 to $1,530. Similarly, those of elderly couples, widowers or widowers with two children will increase by $95, $55 and $113 per month respectively. Their average 2024 check amounts will be worth $3,067; $1,759 and $3,633 in order of mention.