Social Security Recipients to Get Lower Boost in 2024: What Retirees Should Know

A Social Security card sits alongside checks from the U.S. Treasury in Washington on Oct. 14, 2021. Kevin Dietsch/Getty Images

Tens of millions of Americans who receive Social Security payments will see their monthly checks increase by a modest amount, according to the Social Security Administration (SSA).

The SSA, which manages the payments, said on Oct. 10 that the latest cost-of-living adjustment (COLA) will be 2.5 percent of Social Security and Supplemental Security Income benefits.

How Much on Average?

Those benefits will be doled out starting in January 2025, the agency said.

With the adjustment, retirees should see their benefits increase by about $50 per month on average, according to the agency.

“This year, for the first time, Social Security beneficiaries will receive a newly designed and improved COLA notice that makes it easier for customers to find the information they need most,” the agency said in a news release, adding that it uses “plain and personalized language” and will give the exact dates and dollar amounts.

How is COLA Calculated?

The COLA is calculated according to the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers, a measure of inflation, for the months of September, August, and July, according to the SSA.

“If there is no increase, there can be no COLA,” it said.

The reason for the COLA is to make sure that Social Security recipients’ purchasing power isn’t “eroded by inflation,” the administration said.

What Were the Previous Increases?

The smaller increase for 2025’s Social Security payments is due to slower inflation, meaning that prices are not increasing as quickly as during the COVID-19 pandemic’s peak.

In 2023, Social Security recipients saw an 8.7 percent COLA due to decades-high inflation seen in the third quarter of 2022. A 5.9 adjustment was issued for January 2022, also due to then-rapidly increasing inflation.

The all-time highest COLA was in July 1980 when 14.2 percent was received, according to the agency. The second highest, 11.2 percent, happened in July 1981.

Starting from early 2023, the Federal Reserve has increased its interest rates to 5 to 5.5 percent. In its September 2024 meeting, the Fed’s Open Market Committee lowered rates by 50 basis points to a range of 4.75 to 5.25 percent.

How Many Are on Social Security?

Around 72.5 million people, including retirees, disabled people, and children, get a monthly Social Security benefit.

The program is funded by taxes on income subject to Social Security payroll taxes. The government uses taxes from working people to pay benefits to people who have already retired, people who are disabled, the survivors of workers who have died, and dependents of beneficiaries.

In 2025, the Social Security payroll tax will be assessed on the first $176,100 of income, up from $168,600 this year.

Is Social Security Losing Money?

Future problems with the fund have long been predicted, largely because of demographic shifts.

As birthrates decline, fewer people become workers, which results in fewer payments of payroll taxes. Meanwhile, more people are retiring and collecting Social Security.

The annual Social Security and Medicare trustees report released in May said the program’s trust fund will be unable to pay full benefits beginning in 2035. If the trust fund is depleted, the government will be able to pay only 83 percent of scheduled benefits, the report said.

The Associated Press contributed to this report.