Early projections show that Social Security recipients could get a 3.1% pay raise next year, down significantly from the 8.7% COLA bump they received in 2023.
The Social Security Administration plans to release the actual cost of living adjustment for 2024 in October. The agency compares the average consumer price index for the third quarter of 2023 with average data for the same period last year to calculate the increase that about 70 million social security beneficiaries will receive.
The non-profit advocacy group, Senior Citizens League, puts the base statistic used in the calculation at 3.1% and will update its projections monthly until the actual raise is announced in the fall. “This is slow-moving,” said Mary Johnson, a Senior Citizens League Social Security and Medicare policy analyst and author of the forecast.
Prices rose at an annual pace of 4.9% in April, according to data released Wednesday by the Bureau of Labor Statistics. The index used to calculate the COLA is a subset of the CPI-U index, called the Urban Wage and Office Workers Price Index (CPI-W), which is the increased by 4.6%.
COLA is designed to help Social Security recipients maintain their spending power, but research from the Senior Citizens League shows that it has not kept up with the kind of inflation experienced by seniors. Between January 2000 and February 2023, the Social Security COLA increased benefits by 78%, an average annual increase of 3.4%, while the cost of goods and services purchased by the typical retiree increased by 141.4%. %, an average annual increase of about 6.2%, the study found. In other words, for every $100 a retired household spent on her goods and services in 2000, the household could only buy about $64 in today’s value.
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What is the fastest growing area of research? Egg prices have increased 332% since 2000. Out-of-pocket costs for prescription drugs rose next by 311%, followed by kerosene by 279%.
“Living on a fixed income limits what you can do to make ends meet,” Johnson said.
Email Elizabeth Obrien at elizabeth.obrien@barrons.com.
