2024 Social Security Payment Estimates to Rise Unexpectedly, Group Says

Blank U.S. Treasury checks are run through a printer at the U.S. Treasury printing facility in Philadelphia, Pa., on July 18, 2011. William Thomas Cain/Getty Images

The next cost-of-living adjustment (COLA) increase for Social Security recipients might be better than what was previously predicted, according to a nonpartisan seniors group.

The Senior Citizen’s League advocacy group said that the COLA increase for 2024 might be around 3 percent, which is far lower than 2023’s 8.7 percent increase, according to a press release issued this week. Last October, the Social Security Administration, the agency overseeing the payments, announced the adjustment for payments going out starting in January of this year.

Because new consumer price data released by the federal government suggests that consumer inflation in “continues to slow,” the league estimates that the increase could raise from 2.7 percent to 3 percent when the Social Security Administration announces the COLA adjustment.

“There are still three more months of data before the COLA is announced in October, and this estimate could change,” the league wrote, noting the COLA is determined by the inflation for the months of July, August, and September, measured by the Consumer Price Index data that is published each month by the Labor Department. “Inflation for those three months is added together and averaged, then compared with the third quarter average from one year ago,” it added.

If the COLA raises by 3 percent, the average monthly Social Security payment would be raised by about $53.60 to $1,787, according to the news release. Last year’s increase meant that recipients would get an average of $140 per month.

“But Social Security recipients won’t learn the bottom line until the Medicare Part B premiums are announced,” it added. “Part B premiums are automatically deducted from most beneficiaries’ Social Security benefit. In many years, the Part B premium increase can take most, or even all, the COLA leaving little else to cover other rising prices.”

However, even with the increases in COLA, the group noted that the Consumer Price Index doesn’t necessarily provide a good metric for figuring out the average retired person’s spending habits. Seniors have to pay “stubbornly high” prices for prescription drugs, housing, dental services not covered by Medicare, and housing.

“A lower inflation rate has not necessarily meant that prices have decreased” for the goods and services, according to a report (pdf) issued by the Senior Citizen’s League several months ago.

The group also “forecast that the drug and related Part B services required to administer and monitor the patient for dangerous side effects would add about $5 per month to the [Medicare] Part B premium for everyone, potentially raising the 2024 premium to about $179.80 per month,” the release this week said. “Altogether most beneficiaries may see their Part B premium rise by almost $15 per month from 2023. Other costs could drive Part B premiums even higher.”

Meanwhile, the lower Consumer Price Index only reflects the year-over-year prices for goods and services for a single year. Mary Johnson, with the Senior Citizen’s League, said that the COLA did not keep pace with the inflationary pressures that seniors faced in 2021 and 2022 when inflation hit a 40-year high.

“Inflation was so severe in 2021 and 2022 that the average Social Security benefit fell behind by $1,054, leaving 53% of retirees doubting they will recover because household costs rose more than the dollar amount of their COLAs,” she told USA Today.

Future Problems

In recent years, Social Security has been hit because the fund is forecast to cover only 77 percent of benefits in 2033, while not enough money is coming in to sustain it. Inflation and economic output are driving some of the fund’s troubles, while the government is not collecting as much tax revenue as it expected from much of the population.

The future of Social Security and Medicare has become a top political talking point as the 2024 campaign ramps up. President Joe Biden, a Democrat, has vowed to rebuff any Republican-led efforts to cut Medicare or Social Security benefits to brace for the shortfall. Instead, he’s pitched raising taxes on some of the country’s wealthiest people, those making $400,000 or more a year, to shore up Medicare. He has not offered up a plan for Social Security, however.

Most U.S. adults are opposed to proposals that would cut into Medicare or Social Security benefits, and a majority support raising taxes on the nation’s highest earners to keep Medicare running as is, according to an Associated Press-NORC Center for Public Affairs Research poll in March.

About 79 percent say they oppose reducing the size of Social Security benefits and 67 percent are against raising monthly premiums for Medicare. About 65 million older and disabled people access government-sponsored health insurance through Medicare and rely on monthly payments from Social Security.

But the poll found that many Americans have doubts about the stability of both programs: Only about 2 in 10 are very or extremely confident that the benefits from either program will be available to them when they need them, while about half have little or no confidence.

The Associated Press contributed to this report.