Home Personal Finance Social Security COLA Will Drop Significantly in 2024 — How Low Could It Go?

Social Security COLA Will Drop Significantly in 2024 — How Low Could It Go?

by TodayDigitNews@gmail.com
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Geber86 / iStock.com

Geber86 / iStock.com

Declining U.S. inflation Good news for American consumersbut it can lead to much smaller cost of living adjustments (COLA) for Social Security beneficiaries next year — could be as low as 2% or less.

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That estimate was provided by the Senior Citizens League, a bipartisan advocacy group for seniors, based on the latest inflation rates. In 2024 he would be the smallest adjustment since 2020 if COLA falls below his 2%.

COLA is determined each October by the Social Security Administration. The agency bases its calculations on year-over-year growth in the consumer price index (CPI-W) for urban wage earners and office workers in the third quarter, reports CBS News. . COLA is zero if there are no changes.

If the CPI-W rise is particularly high, as in the third quarter of 2022, Social Security beneficiaries can expect significantly higher monthly payments in the upcoming financial year. That’s the case now. Due to last year’s high inflation rate, COLA in 2023 is 8.7% — best in over 40 years.

The Senior Citizens League’s forecast of a significant COLA drop in 2024 is based on the declining CPI-W 12-month average rate. Overall inflation rose by 6% in the 12 months to February 2023, according to this week’s report from the U.S. Bureau of Labor Statistics. This was the smallest increase in 12 months since the period through September 2021.

“Based on February inflation data, [FY 2024] COLA appears to be below 3% and could drop to 2% or even lower range by Q3 if the 12-month average continues to decline,” it wrote in an email to CBS Moneywatch. .

Her group plans to release official COLA projections for 2024 in May.

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A small adjustment next year could be bad news for seniors with more experience dealing with a COLA that can’t keep up with inflation. We are not convinced that it will be effective in combating the high prices of other commodities.

as previously reported GOBanking rateA recent survey by The Senior Citizens League found that more than half (54%) of senior consumers were “not convinced” that the 8.7% COLA could handle rising costs in 2023. rice field. The cost for 2022 has risen a lot more than his COLA currently.

That pessimism stems largely from Social Security beneficiaries struggling to keep up with last year’s inflation rate. In 2022 he was given his COLA of 5.9% (the highest in about 40 years at the time) but stayed there for almost a year with inflation over 7% when the rise was negated almost immediately.

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This article originally appeared on GOBankingRates.com: Social Security COLA will drop significantly in 2024 — how far can it drop?

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