Social Security Benefits Will Increase by 3.2% in 2024

According to the Social Security Administration, the Social Security and Supplemental Security Income (SSI) benefits for more than 71 million Americans will increase by 3.2% in 2024.

The 3.2 increase for 2024 is "a much smaller increase than the inflation-fueled boosts of the past two years," which were 8.7% for 2023 and 5.9% for last year, explains Tami Luhby in Senior citizens will see a much smaller Social Security boost for 2024 (CNN, 10/12/2023).

The COLA increase is designed to help seniors and other beneficiaries keep up with the rising cost of living. The rates increase when the cost-of-living rises, as measured by the Department of Labor's Consumer Price Index (CPI-W). The CPI-W rises when inflation increases, leading to a higher cost-of-living (which means prices for goods and services, on average, are higher). The cost-of-living adjustment (COLA) helps to offset these costs.

The lower COLA for 2024 "reflects the damper that's been put on inflation," writes Janet Novack in Social Security Benefits Will Rise 3.2% In 2024, While Top Tax Rate Jumps 5.2% (Forbes, 10/12/2023).

Although the rate of increase has slowed, according to a new survey by The Senior Citizens League, high prices remain a concern for many seniors, reports Luhby.

For many seniors and individuals with disabilities, Social Security benefits are a crucial source of income that helps them pay for food, housing, and other basic necessities. The COLA increase is intended to help ensure that these individuals can maintain their standard of living as prices for goods and services continue to rise.

Some experts have suggested that the Social Security Administration should use a different measure of inflation that reflects the spending patterns of older Americans, such as the Consumer Price Index for the Elderly (CPI-E). This index tends to give more weight to health care and housing costs, which are typically higher for seniors than for younger consumers. However, switching to the CPI-E would require congressional action and could have other implications for the program's finances.

Overall, the 2024 Social Security COLA increase is good news for seniors and other beneficiaries who rely on these benefits to make ends meet. While the increase may not be enough to offset the rising cost of living fully, it will still provide some much-needed relief for those who need it most. As always, it is important to stay informed about any changes to Social Security benefits and to plan accordingly to ensure a secure financial future.