If you've been anxiously awaiting next year's Social Security cost-of-living adjustment (COLA) announcement, I've got good news and bad news. The good news is that you won't have to wait much longer. The Social Security Administration (SSA) will announce the new COLA on Oct. 12, 2023. The bad news is that it might not be what you were hoping for.
The latest projections indicate that the 2024 COLA won't come close to the 8.7% increase seniors saw in 2023. Below, we'll take a closer look at why, along with what seniors can do to make ends meet in 2024.
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Why will 2024's COLA be lower than 2023's?
The 8.7% Social Security boost seniors saw in 2023 was the largest jump in 40 years, and it came amid a time of record inflation. That's not a coincidence. The SSA bases its COLAs on the increase in the cost of goods and services from one year to the next. Specifically, it compares the third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) -- a measure of the cost of a bunch of common products and services -- from the current year and the previous one.
To calculate the 2024 COLA, the SSA averages the CPI-W data for July, August, and September of 2023 and compares them to the average CPI-W data from those months in 2022. The percentage increase dictates the COLA. For example, if this year's expenses were 1% higher than last year's expenses, the COLA would be 1%.
The record inflation we faced in 2021 and 2022 drove the high COLA in 2023, but now that's beginning to slow down. This will lead to a smaller difference in the CPI-W data for 2022 and 2023, and thus, a smaller COLA.
No one knows what the real COLA will be until the SSA releases the CPI-W data for September, but the Senior Citizens League estimates that it will come in at around 3.2%. To put this in perspective, if you currently receive the average Social Security check of $1,792 per month, you'll receive $1,849 in 2024 -- a difference of $57.
That might be disappointing to hear, especially if you've already been struggling to make ends meet with your current checks. Many seniors feel that Social Security's COLAs should be calculated in a different way so they better reflect senior spending and keep up with rising costs. But there's not much the average person can do about this. That doesn't mean you'll just have to make do with less, though.
How seniors can get the money they need in 2024
The SSA will mail COLA notices to all seniors on Social Security throughout December, so you'll know how much you can personally expect from the program in 2024. And if you have a my Social Security account, you'll be able to view this information even sooner from there.
Once you know how large your 2024 checks will be, you can compare these to your monthly expenses to see how things stack up. If you're concerned that your benefits won't be enough to cover all your bills, you'll have to come up with a strategy to get the extra money you need.
Obviously, things like taking on a part-time job, shopping sales, and reducing your expenses are all helpful if you're able to do them. But sometimes, these aren't options, or they may not be enough. In that case, your best bet is to seek out additional forms of assistance to help you with your essential costs.
Supplemental Security Income (SSI) is one option. This is a monthly check administered by the SSA to low-income, low-resource people who are blind, disabled, or age 65 or older. The amount you'll receive varies based on your income and assets as well as where you live. Some states also kick in a little extra to help their seniors. You can learn more about eligibility requirements and how to apply on the Social Security Administration's website.
You may also qualify for additional aid, like Supplemental Nutrition Assistance Program (SNAP) benefits to help you with groceries or Medicaid to assist with costs Medicare doesn't cover. You might be able to find assistance programs for housing, food, healthcare, and utility costs through federal, state, or local agencies as well. Use this Benefit Finder to locate programs you might be eligible for and learn how to apply.
Even though we don't know what the official COLA is yet, it's not too early to begin exploring these other options if you're worried it won't be enough. It might take time to get approved for some of these other benefit programs, so the sooner you apply, the better off you'll be when 2024 arrives.
