In 2023, the cost of living adjustment (COLA) was the highest in 40 years at 8.7%. This increased benefits for retirees receiving income from the Social Security Administration (SSA).
However, by 2024 the scenario could be completely different, as there are few experts who assure a significant drop in COLA.
Taking the current inflation crisis in the United States as a context, this is how the League of Senior Citizens comes to such a conclusion about COLA. The league is made up of a non-partisan group that advocates for the rights of America’s retired and senior citizens.
Retirees also fear that COLA could spiral out of control and, if true, it would be the lowest amount given to older adults since 2020.
However, there are still several months to go before the Social Security Administration determines the exact percentage increase retirees will receive.
What can happen in 2024?
The calculation is based on the percentage increase in the Consumer Price Index for Urban Salaried and Clerical Workers (CPI-W) in the third quarter of the year. This is all in comparison to the previous year, so if there is no change, the COLA could be as high as 0%.
For the 12 months ending February 2023, the headline inflation rate rose to 6%, according to the Bureau of Labor Statistics. According to CBS Money Watch, this represents the smallest 12-month increase since the period ending September 2021.
For this reason, Mary Johnson, a Social Security and Medicare policy analyst for the Senior Citizens League, offered a rating to CBS Moneywatch.
He warned that COLA will be below 3% by fiscal year 2024 and could drop to the 2% range. The numbers could get worse if the decline in the 12-month average for the third quarter of the year continues.