Skip to content

Seniors’ cost of living adjustment (COLA) is expected to decrease drastically in the upcoming year, compounded by the high price of goods that contrasts with the falling rate of inflation.

The Social Security Administration is expected to announce the 2024 Social Security COLA this October, anticipated by some groups to hit 3 percent and raise the average monthly benefit of about $1,787 by approximately $53. The present 8.7 percent monthly increase in retirees’ income was touted by the SSA last October as the highest rate in 40 years.

In July, the Federal Open Market Committee (FOMC) announced a .25 basis point interest rate increase from 5.25 percent to 5.5 percent—the largest level in 22 years and the 11th hike of the past 12 U.S. central bank policy meetings, beginning in March 2022. The FOMC has consistently sought to bring inflation down to 2 percent.

The Senior Citizens League (TSCL), a large nonpartisan senior group, made the 3 percent estimate in July. The estimate rose from 2.7 percent in June, taking into account a slight increase in the average rate of inflation plus the Consumer Price Index for Urban Wage Earners and Clerical Workers—an index used to determine the COLA—being up only 2.3 percent year over year.

Stock image of Social Security cards. Monthly Social Security average payments are estimated to decrease nearly 5 percent compared to the current rate, due to decreased inflation. Prices of essential goods still remain high, especially for seniors.Backyard Production/Getty

The next three months, in addition to the announcement of Medicare Part B premiums, will dictate the final rate.

“While the rate of inflation has decreased, prices for many goods and services are still high,” Mary Johnson, Social Security and Medicare policy analyst at TSCL told Newsweek. “In other words, inflation is not done with us yet.”

The Committee for a Responsible Federal Budget, a public policy organization that assesses the federal budget and fiscal issues, estimated in its own forecast that Social Security COLA would increase between 2.6 percent and 3.3 percent in 2024, with the higher range holding up only if inflation continues to drop.

The following are monthly averages of Social Security benefits based on SSA data and include estimated monthly averages should the 3 percent COLA estimate come to fruition, per business forecast publication Kiplinger:

Retired workers

  • Average monthly benefit: $1,837.29
  • Average monthly benefit with 3 percent COLA: $1,892.41

Spouses of retired workers

  • Average monthly benefit: $893.01
  • Average monthly benefit with 3 percent COLA: $919.80

Children of retired workers

  • Average monthly benefit: $859.79
  • Average monthly benefit with 3 percent COLA: $885.58

Survivor benefits

  • Average monthly benefit: $1,451.85
  • Average monthly benefit with 3 percent COLA: $1,495.41

Nondisabled widow(er)s

  • Average monthly benefit: $1,713.36
  • Average monthly benefit with 3 percent COLA: $1,764.76

Disabled widow(er)s

  • Average monthly benefit: $894.78
  • Average monthly benefit with 3 percent COLA: $921.62

Disabled workers

  • Average monthly benefit: $1,486.42
  • Average monthly benefit with 3 percent COLA: $1,531.01

Spouses of disabled workers

  • Average monthly benefit: $407.63
  • Average monthly benefit with 3 percent COLA: $419.86

TSCL conducted a survey of 1,759 retirees in mid-July, finding that 79 percent of them reported that lingering high prices—for essential items including housing, food and prescription drugs—continue to significantly impact household budgets.

In the same poll, just 9 percent of respondents said their costs remain the same as a year ago and 7 percent said they were lower.

The Bespoke Investment Group reported that the combined costs of a new 30-year fixed-rate mortgage and a gallon of gasoline hit their highest peak in over 20 years, surpassing rates from both one year ago when inflation was extremely high and during the economic recession of 2008.

In February, President Joe Biden pledged that he would not “cut a single benefit” related to Social Security or Medicare, vowing to extend the Medicare trust fund for at least two decades.

Newsweek reached out to the SSA and White House via email for comment.

[ad_2]