Every month, the Social Security Administration (SSA) disburses various benefits to recipients, encompassing retired and disabled workers, along with other eligible individuals. Aside from regular Social Security payments, the SSA oversees programs such as Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
These benefits see periodic increases to keep pace with the ever-fluctuating cost of living. This mechanism, known as the Cost of Living Adjustment (COLA), is a vital safeguard against the erosion of benefit value due to inflation.
COLA hinges on the annual rise in the Consumer Price Index for Urban Wage Workers and White-collar Workers (CPI-W). The Bureau of Labor Statistics (BLS) furnishes monthly CPI-W data, as well as a more comprehensive CPI index, to monitor price shifts affecting households in diverse regions with distinct consumption patterns.
Despite this method, some entities like the Senior Citizens League (SCL), a senior rights advocacy organization, contend that a CPI tailored specifically for seniors should be created, considering the unique consumption habits of this demographic. Nevertheless, the SSA currently employs the CPI-W for COLA determination by comparing the average CPI-W data for July, August, and September of the current year to that of the previous year’s third quarter.
For instance, the difference between the CPI-W figures for 2021 and 2022 amounted to 8.7 percent, leading to an 8.7 percent increase in Social Security payments for 2023. As for 2024, predictions for the COLA percentage have surfaced, but the precise figure has not yet been officially disclosed.
Official COLA Announcement:
The official announcement of the COLA is contingent upon the availability of CPI-W data for July, August, and September. Typically, the COLA for the following year is unveiled in October. For example, following the precedent set in previous years, the COLA for 2024 is expected to be announced on October 12, coinciding with the release of the BLS’s September CPI report.
The COLA adjustments are set to come into effect in December and will be reflected in Social Security and SSI payments starting in January 2024. However, because January 1st is a federal holiday, those accustomed to receiving payments on the first of the month will witness their first COLA-adjusted payment deposited in their bank accounts toward the end of December.
Predictions for the 2024 COLA:
Forecasts for the 2024 COLA are available, with the Senior Citizens League (SCL) estimating it to be approximately 3.2 percent. This projection is grounded in data derived from the consumer price index for the months of July and August. While this forecast provides a glimpse into what beneficiaries might expect, the final and official COLA percentage will only be known once the SSA announces it in October.