At the start of 2023, seniors on Social Security saw their monthly benefits rise 8.7%. That was the largest cost-of-living adjustment, or COLA, to arrive in decades.

But 2024's COLA is shaping up to be considerably smaller. And based on recent inflation data, the non-partisan Senior Citizens League is projecting that next year's COLA will come in at 3.2%. A raise of that size would give the average monthly $1,790 benefit a $57 lift.

A person at a laptop.

Image source: Getty Images.

Clearly, that's a far cry from 8.7%. And it may be a number a lot of seniors aren't happy with. But while a 3.2% COLA might seem like a bad thing, in reality, it's actually not.

Why a smaller COLA isn't so bad

Many Social Security recipients rely heavily on COLAs to be able to make ends meet. So a smaller raise might seem like a blow, especially after 2023's generous 8.7% increase.

However, one thing to keep in mind if you're disappointed by recent COLA projections for 2024 is that those raises are directly tied to inflation. So a smaller COLA simply means that inflation has cooled, while a larger COLA means that inflation has been more rampant and disruptive.

To put it another way, seniors are really looking at somewhat of a break-even situation. If you're upset about a smaller raise in 2024, remember that in return, you may not have to pay as much to buy groceries, fill up your car, or cover utility bills. So you're not totally losing out.

It's also worth noting that while a 3.2% COLA clearly can't compare to an 8.7% raise, it's also higher than the average Social Security COLA over the past 20 years. During the last two decades, seniors received an average raise of 2.6% from Social Security. And there were some years when seniors didn't get a COLA at all. So in that context, 3.2% doesn't seem so bad.

We'll learn more in October

The Social Security Administration won't be able to officially announce a 2024 COLA until October. That's because COLAs are based on third quarter inflation data, so we'll need to wait until September's Consumer Price Index is released to get a final number.

There's a chance 2024's COLA will end up a bit higher or lower than 3.2%, depending on how things shake out in September. But at this point, it's fair to use that number as an estimate.

If you're worried that a COLA in the 3.2% range won't do much for your finances, think of other ways to improve them. That could mean joining the gig economy or finding ways to cut back on expenses, like downsizing from two cars to one, or to a smaller home.

The purpose of COLAs is to help Social Security recipients retain buying power during periods of inflation. It's not necessarily to help them get ahead. So while a 3.2% COLA might seem disappointing at first, when you look at the data, a raise of that size is actually pretty fair and makes a lot of sense.