Social Security Benefits Will Increase by Only 3.2% in 2024
If you’re on Social Security, you can expect your check to increase by 3.2% in January. That’s a much smaller cost-of-living adjustment than recipients got in 2023 (8.7%).
The Social Security Administration made the announcement Oct. 12, the same day new inflation numbers were released.
Here’s what that will look like for the average Social Security recipient:
- Retired workers will get an extra $59 a month on average, bringing the average monthly benefit to $1,906.
- Disabled workers will get an extra $48 a month on average, bringing the average monthly benefit to $1,537.
- The maximum Supplemental Security Income (SSI) benefit for individuals will increase by $29 a month, bringing the maximum monthly benefit to $943.
A 3.2% cost-of-living adjustment (COLA) may be less appealing in 2024 than it would’ve been in previous years, since the 2023 Social Security COLA was the largest it had been in 40 years. But as the dust of skyrocketing inflation settles, it was only a matter of time before Social Security benefits followed suit.
Even so, prices are still higher than before the pandemic. Will an extra $50 a month be enough for the average retiree?
Why Is this Year’s COLA Smaller?
Social Security’s annual cost-of-living adjustment is tied to inflation. And over the last couple of years, inflation had been stubbornly high.
That’s why Social Security recipients got a 5.9% increase for 2022 and an 8.7% cost-of-living adjustment for 2023. But as inflation finally cools, so does the size of Social Security COLAs.
It’s a lot more scientific than just looking at inflation generally. Instead, the government uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, to measure inflation.
Each year, Social Security averages the CPI-W figures from the third quarter and compares it to the previous year’s figure. Because costs are up 3.2% year-over-year at this point in time, that’s the official adjustment for 2024.
The Future of Social Security
Currently, 71 million Americans rely on some form of Social Security benefit. But this financial safety net could start to run dry within a decade.
According to the 2023 Trustees Report released by the Social Security office earlier this year:
- The Hospital Insurance Trust Fund will only be able to pay out 100% of scheduled benefits until 2031. At that time, the fund will pay out 89% of scheduled benefits.
- The Old-Age and Survivors Insurance Trust Fund will only be able to pay out 100% of scheduled benefits until 2023. At that time, the fund will pay out 77% of scheduled benefits.
The government can theoretically take action to buy the programs more time, but the clock is ticking.
At the same time, critics of Social Security’s COLA process say we should be using the CPI-E (Consumer Price Index for the Elderly), not the CPI-W. That’s because people 62 and older tend to spend more on things like housing and healthcare — which would necessitate a larger cost-of-living adjustment.
What if Your Social Security COLA Isn’t Enough?
There are no easy fixes if your Social Security check won’t go far enough, even with a 3.2% COLA.
If you’re struggling to pay for food, getting assistance from a food pantry or an organization like Meals on Wheels may be an option.
If you have an emergency expense, like you’re facing eviction or an energy bill you can’t afford, try calling United Way’s 211 hotline, which can connect you with local resources.
Here are some other resources:
- How to Find Affordable Senior Housing if You’re Struggling to Pay Rent
- How to Get Cheap or Free Internet Through the Affordable Connectivity Program
- 13 Ways for Retirees to Make Extra Money in Their Spare Time
- 75 of the Best Senior Discounts for Food, Entertainment, Travel and More
- How to Enroll in a Medicare Savings Program
The 3.2% increase in Social Security benefits will certainly help seniors with their costs, but $50 a month may not be large enough to really feel a difference. If you’re plotting out your finances for 2024, be realistic about how far the extra $50 from Social Security will actually go in your retirement budget.
Unfortunately, the average Social Security recipient will see most of their pay raise eaten up by rising living costs.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. Timothy Moore contributed to this report.