The Social Security Administration’s biggest day of the year is coming Oct. 12 when the annual cost-of-living adjustment will be announced.
But don’t get too excited. The 2024 COLA for Social Security is expected to rise about 3.2%, according to estimates from the Senior Citizens League, a pro-senior think tank. That’s compared to an 8.7% increase for 2023, which was the highest COLA in more than 40 years amid high inflation.
The average COLA over the last 20 years has been about 2.6%. And keep in mind that the COLA is a benefit adjustment that reflects inflation — it’s not a raise. It just catches beneficiaries up with current inflationary pressures.
Still, any COLA increase is a help for the roughly 67 million Social Security beneficiaries. Almost 70% of retirees rely on Social Security as their primary retirement income source, according to the Transamerica Center for Retirement Studies.
Based on the 3.2% estimate, the COLA increase would mean an additional $57.30 per month for a retiree receiving the average monthly benefit of $1,790, according to the Senior Citizens League.
COLA is calculated based on the consumer-price index for urban wage earners and clerical workers, known as CPI-W. That index more heavily weighs costs for transportation, food, apparel and other expenses that would be bought by an urban non-retiree.
There’s another consumer price index that targets elderly spending specifically, called the CPI-E, which focuses more on healthcare, housing and other goods and services a retiree uses. Some legislators have pushed to switch Social Security’s COLA to follow CPI-E in proposals intended to expand and improve the program.