The Cost of Living Adjustment (COLA) is a mechanism that helps United States citizens fight inflation. Through this system, the Social Security Administration increases the checks it sends out every month a little bit each year. And in this year’s case, January’s payment already has the COLA included, but some Americans want to know why many checks have a larger increase than others.
We need to understand how the COLA works, what is the basis for the increase and how it directly affects the monthly payments. Once we know this, we can learn why we will not get the maximum increase in our Social Security payment this year or any of the following years. Each year we will get a similar increase based on our current payment.
In this sense, it is true that it is a fairly fair system, since Social Security beneficiaries do not lose purchasing power. The ultimate goal of the COLA is not to make retirees rich, but to enable them to deal directly with inflation and general price increases. So next let’s take a look at why you don’t have that maximum increase but you do have the increase you are entitled to.
Why don’t I have the maximum COLA 2024 in Social Security?
First of all let’s understand what the Cost of Living Adjustment (COLA) is. The government calculates what the COLA will be for next year through the price increase in the CPI-W for the third quarter. With this calculation it decides what the fair increase will be for next year 2024. Still, it is important to keep in mind that sometimes it may not be enough. And that is because inflation can continue to increase.
With this in mind, we must now know what the increase in 2024 has been. This Social Security increase is 3.2%. This COLA was announced in October and since then we could already know what the check would be as of January of this year. Since the increase is a percentage, if we do not have the maximum retirement payment we will not be able to get the maximum increase.
It is that simple, as we are always going to get an increase corresponding to our current check. If we have a $1,000 payment, for example, we will get a $32 increase. Every $1,000 of Social Security we will get an extra $32, which will make the check bigger starting in January 2024.
Next retirement payment
The last of the January retirement payments will be on the 24th of this month. This check mailing will be the last of the first month with the 3.2% COLA added. So retirees in 2024 will be able to collect the Social Security they collect this month. In other words, the amount received in January will be repeated for the rest of the year’s payments.
In order to get the 24th day payment we will need to meet two requirements. On the one hand, to be retired after 1997. On the other hand, you must have your birthday between the 21st and 31st of the month. There is no extra requirement for the Administration to send us the payment, but if we want to get it as soon as possible we must activate Direct Deposit.
After this payment we will have to wait until February to get a new check. The advantage is that we will already know the exact amount that Social Security will send in this benefit.