The Social Security Administration (SSA) is slated later this month to announce the cost-of-living adjustment (COLA) that awaits in 2024 for tens of millions of retired Americans.
The U.S. Bureau of Labor Statistics (BLS) is scheduled to release September’s consumer price index (CPI) data on Oct. 12; the SSA is likely to announce next year’s COLA that day. Last year, the SSA made the announcement on Oct. 13 after the BLS released the September 2022 inflation figure.
There had been speculation that a government shutdown would push the agency’s COLA announcement to a later date. However, a shutdown was averted over the recent weekend as a spending deal was enacted to temporarily fund the government.
Payments to about 70 million Social Security retirees and those who get Supplemental Security Income (SSI) will be affected by the COLA report. The percentage will apply to most payments starting from December.
The COLA is determined by the annual change at the end of each year’s third quarter in the CPI for urban wage earners and clerical workers, published each October by the BLS.
Nonprofit organization The Senior Citizens League estimates this year’s COLA to be a 3.2 percent increase, based on recent inflation numbers, the group said in a statement last month. That would average out to about a $57 increase in extra benefits, raising them to about $1,790 for the average recipient, it estimated.
In August, the organization had predicted that, based on inflation, the COLA would be a 3 percent boost. That came before the Department of Labor released its August inflation numbers.
Last year, with annual inflation raging near the highest in four decades, the SSA announced a COLA increase of 8.7 percent for 2023 payments, the largest increase since 1981 and the fourth-largest in U.S. history. Price increases have slowed sharply this year in the face of stiff interest-rate increases by the Federal Reserve.
Another larger-than-average COLA increase may be on the cards this year. While inflation has slowed from its peak rate in the summer of 2022, it remains above the rate that prevailed over the 10 years prior to the pandemic. While the COLA has averaged 2.8 percent since 1984, it averaged just 1.4 percent from 2010 through 2019, and in three of those years, there was no increase.
In August, the CPI was up by 3.4 percent year-over-year and has ticked up since June, with some analysts saying that’s due to higher gasoline prices. Still, whatever COLA is announced for 2024 is unlikely to offer the same buffer against inflation as recipients enjoyed in 2023.
Inflation Pressures
Because inflation has remained relatively high compared with much of the 2000s, it may continue to pose problems for seniors on a fixed income.“Inflation was so severe in 2021 and 2022 that the average Social Security benefit fell behind by $1,054, leaving 53 percent of retirees doubting they will recover because household costs rose more than the dollar amount of their COLAs,” Ms. Johnson told USA Today.
Some Social Security recipients, she said, have different situations.
“There are the planners who put money aside, maybe worked for companies that had pensions,” she said, according to Newsweek. “They may have a 401(k) or worked in the military and had retiree benefits. And then there’s the other side.”
Ms. Johnson said that some Social Security recipients may also have to pay taxes—as a result of last year’s COLA of 8.7 percent. About 23 percent of recipients paid taxes on at least a part of their benefits for the first time during the past tax season, she said, citing a survey.
Overpayments?
There has been a rash of recent reports indicating that the SSA has sent letters demanding that some Social Security or SSI recipients pay the agency back due to overpayments. Some of the letters, according to the reports, demanded tens of thousands of dollars in back payments spanning several years.A spokesperson for the agency said in a statement last month that it handles overpayments on a case-by-case basis.
“Social Security is required by law to adjust benefits or recover debts when we establish that someone received payments to which they are not entitled and an overpayment occurs. We must maintain our responsibilities to taxpayers to be good stewards of the trust funds.”
