We're getting really close to finding out what cost-of-living adjustment, or COLA, seniors on Social Security will be getting in 2024. The reason that raise hasn't been officially announced yet is that it's based on third quarter inflation data.
While we've wrapped up the third quarter of the year, a 2024 COLA can't be calculated until data on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) arrives for September. And that information won't be released until Oct. 12.
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Meanwhile, based on CPI-W readings from July and August, the non-partisan Senior Citizens League is projecting a 3.2% Social Security COLA for 2024. That number has the potential to wiggle a little bit based on September's CPI-W reading, but it's a reasonable assumption based on the data we have to date.
If a 3.2% COLA ends up becoming official, the average Social Security benefit would rise by $57.30 a month in 2024. And that's a decent bump, even if it's nowhere close to the 8.7% COLA Social Security recipients got at the start of 2023.
But the big question mark surrounding 2024's COLA is Medicare. If the cost of Medicare Part B increases a lot, seniors' upcoming COLA could be whittled down in a very big way. So that's something Social Security recipients need to keep in mind.
Will Medicare hikes be a problem for Social Security recipients?
Seniors who receive coverage through Medicare and benefits through Social Security pay their Part B premiums out of their Social Security benefits directly. In 2023, the cost of Part B went down for the first time in years, so Social Security recipients got to keep their generous 8.7% COLA in full.
But Medicare Part B premiums aren't expected to drop again. Rather, they're expected to rise. The result? Less net monthly income for Social Security recipients.
Now earlier in the year, the Medicare Trustees projected that the cost of Part B would rise from $164.90 a month in 2024 to $174.80. That's about a $10 increase. Meanwhile, we just learned that a 3.2% COLA would raise the average Social Security benefit by about $57 a month. So even when we deduct $10, the typical beneficiary is looking at a $47 monthly raise.
But that assumes the cost of Medicare Part B only rises about $10. The Senior Citizens League expects the cost of Part B to go up to $179.80 per month in 2024 based on added costs the program is likely to encounter (namely, a new Alzheimer's drug). That's a $15 increase instead of $10.
We'll have to wait and see
News on 2024's Social Security COLA should arrive within the week, and updates on Medicare costs should follow shortly after that. Until then, all we can do is guess at the amount of money seniors will gain in the new year. But it's fair to assume either way that any increase in monthly income will pale in comparison to what Social Security recipients were privy to at the start of the current year.
