Recent government inflation data suggests that in 2024, Social Security recipients could see a 3.2% cost-of-living adjustment (COLA), as projected by The Senior Citizens League. According to this nonpartisan senior advocacy group, this anticipated increase would boost the average monthly retirement benefit by approximately $57.30.
It’s worth noting that The Senior Citizens League’s calculations are based on a current average retiree benefit of $1,790, which is slightly lower than the Social Security Administration’s reported $1,837 average monthly retirement benefit. The variance stems from the fact that The Senior Citizens League’s calculation includes spousal and other dependent benefits, in addition to those received by primary workers.
While the projected 3.2% Social Security COLA for 2024 is notably less than the official 8.7% increase beneficiaries received in 2023, it surpasses the average annual increase of 2.6% observed over the past two decades.
Before considering the potential impact of the estimated 3.2% boost on your 2024 benefits, it’s crucial to keep in mind the following official release dates.
Official 2024 COLA Announcement in October: The Senior Citizens League’s 3.2% COLA estimate relies on consumer price index data through August. The Social Security Administration is expected to announce the official COLA for 2024 in October. This official calculation will take into account inflation data for July, August, and September from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Any increase in this data will determine the size of the COLA.
Impact of Medicare Part B Premiums: Medicare Part B premiums are usually deducted directly from Social Security checks, so their size influences the amount of the COLA beneficiaries may experience. These premiums change annually, and projections from the Medicare trustees indicate that the average monthly premium may increase to $174.80 in 2024, up from $164.90 in 2023. The finalized Medicare Part B premium rates for the following year are typically announced in November.
American’s Reliance on Social Security & Growing Deficit
The Social Security Administration reports that, among elderly beneficiaries, 12% of men and 15% of women rely on the program for 90% or more of their income. The long-term outlook on the health of the social security fund is a commonly discussed topic and with more people becoming reliant on their benefits as their sole source of income, it could spell trouble for them down the road if any major changes occurred.
(Source: 2023 Social Security Trustees Report)
Social Security moved from a projected 75-year actuarial surplus of 0.02% of taxable payroll in the 1983 Report to a projected deficit of 3.61 percent in the 2023 Report. As the deficit grows, recipients need to keep an eye out for potential changes and worker’s can brace for potential tax increases to cover this shortfall.
Presented by the Financial Planning Committee of Lake Street, an SEC Registered Investment Adviser
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