Social Security COLA Estimated at 3.0% for 2024

What You Need to Know

The estimate reflects a 0.2% rise in prices in June and a 3% increase over the prior 12 months, according to The Senior Citizens League.
The actual 2024 COLA will be based on third-quarter inflation data and will be announced in October.

The Senior Citizens League estimates the Social Security cost-of-living adjustment, or COLA, for 2024 will be 3%, based on the latest consumer price index data, released Wednesday,

The CPI data shows that prices have risen by 3.0% over the past 12 months while increasing 0.2% in June. This is up slightly from a 0.1% increase during May, showing a steady, if modest, decrease in annual inflation.

The group’s Social Security COLA estimate for 2024 is up from last month’s prediction of 2.7% but far below the near-record 8.7% COLA for 2023.

Mary Johnson, the league’s Social Security and Medicare policy analyst, bases monthly COLA estimates on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W.

Since January of this year, Johnson tells ThinkAdvisor, the actual inflation rate, as measured by the CPI-W, was lower than the amount older Americans received in their 8.7% COLAs. That difference theoretically should provide a modest temporary improvement in buying power for a retiree.

As Johnson tells ThinkAdvisor about the new June data, a COLA of 3% would raise the current average monthly benefit of $1,787.00 by a little more than $53.60, but Social Security recipients won’t learn the bottom line until the Medicare Part B premiums are announced.

In many years, Johnson says, the Part B premium increase can take most, or even all, of the COLA, leaving little else to cover other rising prices.

June 2023 Data Boosts COLA Projection

The index for shelter was the largest contributor to the slight monthly uptick in prices, accounting for over 70% of the increase, with the index for motor vehicle insurance also contributing.

The food index increased 0.1% in June after increasing 0.2% the previous month. The index for food at home was unchanged over the month, while the index for food away from home rose more significantly, at 0.4%, during June.

The energy index rose 0.6% in June as the major energy component indexes were mixed.

COLAs and Retirees

According to an ongoing survey conducted by The Senior Citizens League, older consumers are reporting little improvement in their household buying power, even with the recent sizable COLAs and a slight moderation in inflation.

Sixty-two percent of survey participants report food costs as their fastest-growing expense. The biggest concern, according to 22% of survey respondents, was housing costs.

According to the league’s analysis, between January 2000 and February 2023, Social Security COLAs increased benefits by 78%, averaging 3.4% annually.

The cost of goods and services purchased by typical retirees rose by 141.4% during that same period, averaging about 6.2% annually. In other words, for every $100 a retired household spent on groceries in 2000, that household can only buy about $64 worth today.