Each new year, the United States Government and the Social Security Administration increase the amount that retirees get in their benefits. This increase is done through the Cost of Living Adjustment, also known as COLA.
The ultimate idea of this concept is to combat inflation and price increases. After the high inflation of the last few years, retirees could lose purchasing power.
Thanks to the annual increase in the COLA, retirees do not lose so much purchasing power and can meet all the usual expenses. In this sense, it is not that they get a huge increase from Social Security, but enough to not fall too far behind with the new prices.
In order to calculate the COLA, it is necessary to know the evolution of prices for the whole year. Even so, there is a specific formula that the government and the Social Security Administration use for this purpose.
We do not need to calculate the COLA ourselves, as the Administration will calculate it for us. Also, it is not an exact figure for everyone, since it is a percentage, each citizen will get a different increase.
WHEN WILL WE SEE THE COLA INCREASE?
It is still too early to talk about COLA increases as such. The Social Security Administration will add the COLA to the first of the 2024 payments. This means that until the start of next year we will not be able to get this increase in benefits.
However, it is good to note that due to a timing irregularity, citizens with Supplemental Security Income will see the COLA prior to the arrival of the year. The January SSI payment will be on the last business day of December. This will cause the first payment with the COLA to arrive earlier.
Even so, the payment still pertains to January 2024, so at tax time it computes for the following year. In short, if you are waiting for the COLA you are going to have to wait a little longer. We won’t see the new increase until next year 2024.
HOW MUCH WILL THE SOCIAL SECURITY CHECKS COLA INCREASE IN 2024?
It is not possible to know at this time exactly how much the COLA will increase Social Security benefits. It is possible to make an estimate, however, which is 3%. This estimate is from experts in the field such as The Senior Citizens League.
Still, it is too early to know an exact figure. We will know the amount around the second week of October. The estimate is made with the price increase in July, August and September and announced in October.
If you want to know the exact COLA increase, you will have to wait a bit, but what is certain is that it will not reach this year’s increase. In 2023, the COLA increased by 8.7%, making it a record high in Social Security‘s history in recent years.