In calculating the COLA each year, the United States Government takes into account several factors. The main factor is related to inflation at a given point in the year. By contrasting that inflation with that of the previous year it is possible to determine what the COLA is for the following year.
In the year 2024 we will have a COLA of 3.2%. However, President Biden has pointed out that this figure could have changed if things had been done differently. The fact is that the scale used to calculate the Cost of Living Adjustment may not be sufficient for retirees.
Especially if we are talking about age-based retirees. In the case of Social Security beneficiaries due to disability or other reason the COLA is the same, so it affects in the same way. The important thing to keep in mind that the increase is insufficient is to think about the most vulnerable citizens.
And as Biden rightly points out, it doesn’t fully take into account the interests and situation of older beneficiaries. So the COLA does increase, but without looking squarely at aged retirees who collect Social Security as their only source of income.
WHY SHOULD THE COLA HAVE BEEN 4%?
As the government has already officially announced, the COLA for next year is 3.2%. This indicates that Social Security benefits will increase by that percentage starting in January 2024. But this may be unfair for one simple reason. The scale that the Government takes into account for this increase is the CPI-W.
This CPI-W is the price index with respect to workers and not to retirees. For this reason, there is a notable difference between the official 3.2% and the 4% that President Biden is talking about. If we take into account the CPI-E, which refers directly to seniors and retirees, the increase in Social Security checks should be higher.
Therefore, the figure is not correct for all citizens, although there is no way to change it. At least not at the moment. What is certain is that it is possible that in the future both President Biden and other seniors’ groups may be able to push for the government to at some point take into account the CPI-E instead of the CPI-W for the third quarter of the year in calculating this increase in benefits.
HOW WILL SOCIAL SECURITY BENEFITS INCREASE IN 2024?
Each of the benefit categories will have a different COLA increase in the coming year 2024. On the one hand we find the age retirement benefit. The maximum check for this category is currently $4,555. In 2024 it will go to $4,700, so retirees with a maximum check will have an extra payment of almost $150.
On the other hand, SSDI (Disability Benefit) recipients may see a fairly large increase as well. If we take into account that the maximum check for this benefit is $3,627, in 2024 it will increase to $3,743 per month. The increase in this case is $116.
Finally, the Supplemental Security Income check will also have an increase, as usual. Each and every Social Security payment will see an increase through the COLA. In the case of SSI we will have a maximum check of $943 versus $914 this year 2023.
Remember that until January 2024 we will not see the COLA increase in our checks, even though the announcement is now official. But now that you know what the figure is and why it has not reached 4% you can make a calculation of what your benefit will be from January and thus make your economic plans more effectively.