The annual SSA COLA adjustment is a critical element for all United States SSA beneficiaries. Likewise, it is also good for citizens who are not yet collecting a Social Security check.
Any worker in the United States needs to know exactly what the COLA is and how it works. Your future SSA check will depend on this factor. Still, there are some concepts tied to the COLA that can make Social Security payments less than we are looking for.
Each year SSA benefits increase to match general inflation. This means that if we have a Social Security check of $1,800, in the next year we will have that $1,800 per month plus a little more depending on various factors.
The problem comes when when it comes time to plan our Social Security benefit we apply for it in a year when the COLA is not large enough. For all practical purposes this shouldn’t matter, since the COLA always applies to all SSA payments, but sometimes it can feel like we get less money than we were originally looking for.
CLAIMING SSA WITH A LOW COLA
In this year 2023 we have seen a COLA of 8.7% on all SSA checks. This was certainly a record low in decades. So any American who has applied for their retirement check in 2023 has gotten an extra almost 9% that they did not expect to get.
The same will happen in 2024, but at a lower percentage. Citizens will see an increase of about 3%. This figure is not official, but all forecasts point to the fact that this will eventually be the case. If we request the payment in 2023 it is true that we will get a lower payment than if we do it in 2024, since it will not have the COLA added.
Even so, early next year the SSA will add that percentage to our check. Therefore, regardless of what our check is every year we will see that increase in the amount.
HOW IS THE COLA CALCULATED?
To calculate the COLA the Social Security Administration and the United States Government take into account price inflation in the CPI-W for the months of July, August and September.
They contrast those increases with those of the previous year and depending on what the difference is we will have one COLA or another. The announcement of this COLA will be made on the 12th day of October 2023. From that day we will know how much the Social Security checks will increase for 2024, but we will have to wait to get that increase.
Not until January 2024 will the COLA take full effect. Any other SSA payments pertaining to 2023 will not receive the COLA increase, but all checks will be at the same amount as usual.