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Social Security beneficiaries will see a 3.2% boost to their benefits in 2024, the Social Security Administration announced on Thursday.
The annual cost-of-living adjustment for 2024 will affect more than 71 million Social Security and Supplemental Security Income beneficiaries. These benefit adjustments are made annually to help benefits keep place with inflation.
The change will result in an estimated Social Security retirement benefit increase of $50 per month, on average. The average monthly retirement benefit for workers will be $1,907, up from $1,848 this year, according to the Social Security Administration.
Most Social Security beneficiaries will see the increase in their monthly checks starting in January. SSI beneficiaries will see the increase in their December checks.
Just how much of an increase retired beneficiaries will see in their Social Security checks will also depend on the size of the Medicare Part B premium for 2024, which has not yet been announced.
Typically, Medicare Part B premium payments are deducted from Social Security checks. The Medicare trustees have projected the average monthly premium may be $174.80 in 2024, up from $164.90 in 2023.
The 2024 benefit increase is much lower than record 8.7% cost-of-living adjustment Social Security beneficiaries saw this year, the biggest boost in four decades in response to record high inflation. It is also lower than the 5.9% cost-of-living adjustment for 2022.
The average cost-of-living adjustment has been 2.6% over the past 20 years, according to The Senior Citizens League, a nonpartisan senior group.
The 3.2% increase is in line with an estimate released by The Senior Citizens League last month.
The Social Security cost-of-living adjustment is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Data from the third quarter is added and averaged and then compared with the third quarter average from the previous year. If there is an increase, that determines the size of the COLA.
The 2024 adjustment comes as many retirees are still struggling with higher prices.
“Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices,” AARP Chief Executive Jo Ann Jenkins said in a statement.
“We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important,” she said.
Jenkins also called for bipartisan action from Congress to keep Social Security strong. The program is facing a funding shortfall in the next decade. Certain proposals to fix the program have also included a change the way the annual cost-of-living is calculated.
The Consumer Price Index for the Elderly, or CPI-E, may be a better measure for the costs seniors face and help them maintain their purchasing power, advocates for the change argue. However, that measurement may not necessarily provide a bigger annual boost, research has found.
“We’re happy to see an increase,” Tracey Gronniger, managing director of economic security and housing at Justice in Aging, a national organization focused on fighting senior poverty, said of the COLA for 2024.
However, the increase may not be sufficient, particularly for seniors who are living in poverty, she said.
“It’s not enough in the sense that people are still trying to make ends meet, and they’re still kind of struggling to meet their costs for housing and for health care,” Gronniger said.
Higher Social Security benefits due to cost-of-living adjustments in recent years have put low-income beneficiaries at risk for losing access to the Supplemental Nutrition Assistance Program, or SNAP, or rental assistance, according to The Senior Citizens League.
Others may have seen their Social Security benefit income become subject to taxes for the first time, or may have seen the levies on that income go up. Up to 85% of benefits may be taxed based on certain income thresholds that are not adjusted for inflation.
“Social Security really only replaces about 30% or less of your earnings before you retired, and it’s not ever been designed to be extremely generous,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
“It’s relatively modest in terms of income,” she said.