It is essential to note that there is a chance that the cost-of-living adjustment (COLA) for Social Security in the year 2024 may not be as large as initially expected.
Seniors May Struggle with Falling Inflation
The current inflation rate drop in the United States benefits American consumers. Although, this could potentially lead to a decrease in the cost-of-living adjustment (COLA) for Social Security beneficiaries in the forthcoming year. The anticipated COLA could be as little as 2% or even lower.
Cost of Living Adjustments (COLAs) are directly tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In 2023, there was a substantial 8.7% increase in COLAs, mainly due to the high inflation that occurred in the previous year of 2022. The projected COLA increase is expected to be around 3% for the upcoming year.
The Senior Citizens League has predicted a consideration drop in the COLA for fiscal 2024. This forecast is based on the declining trend in the 12-month average rate for CPI-W. A recent report by the U.S. Bureau of Labor Statistics reveals that the overall inflation rate has increased by 6% for the 12 months ending in February 2023. Despite this, it is worth noting that this increase is the smallest recorded in 12 months since September 2021.
Many elderly individuals who heavily rely on Social Security as their primary source of income may unfortunately not witness a substantial increase in their benefits for the upcoming year due to inflation. This, coupled with the rising costs of Medicare, could potentially lead to a reduction in next year’s COLA, resulting in further financial difficulties and hardships for seniors.