Social Security beneficiaries are going to benefit in terms of monthly payments in 2024 with the Cost-of-Living Adjustment (COLA) increase. For some retirees and other recipients, this amount of benefit may rise to about $600 a year, which may help offset increases in the cost of living. And here is more insight into what this increase means and how it affects Social Security beneficiaries.
What is the Social Security COLA?
The Cost-of-Living Adjustment (COLA) is an annual adjustment to Social Security benefits to combat inflation. It’s calculated according to the Consumer Price Index attached to Urban Wage Earners and Clerical Workers (CPI-W). When inflation rises, the COLA maintains the purchasing power of Social Security payments.
The COLA raise for 2024 amounts to 3.2%. Even though it is lower than the historic adjustment of 8.7% in 2023, it is still a meaningful increase for beneficiaries.
How Does the $600 Annual Increase Work?
The number $600 represents the average increase to be received in 2024 by social security recipients. This is because of the application of the 3.2% COLA over the average monthly Social Security benefit. Here’s how this works:
- The average Social Security retirement benefit was around $1,800 per month in 2023.
- A 3.2% increase for cost-of-living adjustment adds about $57 to the payment, on average, per month.
- If therefore you multiply by 12, that equals an annual increase of something like $684, which explains why so many people are calling it a $600 increase.
Who benefits from the COLA increase?
The COLA increase is meant for all the beneficiaries of social security, including:
- Retirees
- Disabled ones under Social Security Disability Insurance (SSDI)
- Recipients of Supplemental Security Income (SSI)
- Surviving spouse and children of workers who died
The precise increase you will see will be dependent on your current benefit amount. Larger amounts will receive a proportionately larger absolute adjustment while lower amounts will see much smaller adjustments.
Why is COLA important?
The COLA is important for millions of Americans who depend on Social Security to pay their most important expenses: food, housing, and medical care. The increases are meant to keep his beneficiaries from going behind the financial ball as prices for necessities rise because of inflation. Inflation will not entirely subtract their purchasing power, but every little bit counts.
What Should You Do Next?
As a taxpayer receiving Social Security, you don’t need to do anything to get the COLA increase. The adjustment will be added to your monthly benefits every January beginning in 2024. Not long before the year ends, you should receive a letter from the Social Security Administration (SSA) with the detailed amount of your new benefit.
For reference planning, consider:
- Review your benefits summary that has been revised.
- Consider budgeting slightly higher due to added income.
- Explore how to best utilize the bonus cash, such as paying down debt or creating an emergency savings nest egg.
Recent FAQs
1. Will all beneficiaries see the exact $600 increase?
Ans: No, the $600 figure is an average estimate based on the typical benefit amount. Your specific increase depends on your current monthly benefit and the 3.2% COLA rate.
2. How can I find out my new benefit amount?
Ans: The Social Security Administration will send you a notice in December 2023 detailing your new benefit amount. You can also check your updated benefits online by logging into your My Social Security account at ssa.gov.
3. When will I see the increase in my benefits?
Ans: The COLA increase will take effect with your January 2024 payment. Most beneficiaries receive their payments on a schedule based on their birth date.
