Retired workers will get an above-average Social Security boost in 2024 thanks to the latest cost-of-living adjustment (COLA). But they're not the only ones. Anyone claiming benefits on a worker's record, including spouses, will also see their checks grow.
Below, we'll look at how much the average spousal benefit will increase, and what you can do if you don't feel the COLA is enough.
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How the 2024 COLA affects spousal benefits
In most years, the Social Security administration adjusts benefits upward in January to help counter the effects of inflation on their buying power. The percentage of these increases is based on how much the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose year over year in the third quarter.
In Q3 2023, the CPI-W was up 3.2%, so in January 2024, that will be the size of the Social Security COLA. But that means different things for different people. The average retired worker, collecting $1,847 per month in 2023, will see their checks rise by $59 to $1,906 per month in 2024. But the same percentage boost for spousal benefits will only lift them by $28 from $885 to $913 per month.
This is due to how spousal benefits are calculated. The government starts by looking at the primary insurance amount (PIA) of the qualifying worker. This is the amount the worker would be entitled to if they began taking their benefits at their full retirement age (FRA) -- between 66 and 67, depending on birth year.
A person's maximum possible spousal benefit will be half of their spouse's PIA. So if your spouse qualifies for a $2,000 monthly benefit at their FRA, the most you could receive under that aspect of the program is $1,000 per month. But you might get even less if you claim benefits before you reach your FRA.
For each month early that you take Social Security, the government permanently shrinks the size of your monthly benefits by a fraction of a percent.
Beneficiaries lose 25/36 of 1% per month for each of the first 36 months of early claiming. Beyond that, early claimants are penalized by 5/12 of 1% of their base benefit for every additional month early they take benefits.
This means that if you begin claiming a spousal benefit as soon as you become eligible to do so at 62, you'll receive 30% less each month than you would've gotten at your FRA of 66. If your FRA is 67, you'll get 35% less by applying at 62.
This is how spousal benefits can be significantly less than the worker's benefit. However, you might wind up with more than the average listed above. If your checks are larger than $885 today, you will receive larger-than-average checks in 2024.
Though the government applies the COLA to the worker's PIA and then takes steps to calculate your new spousal benefit, you can approximate it by adding 3.2% to your checks today. The Social Security Administration will send out official COLA notices to all Social Security beneficiaries in December as well.
What to do if you don't think your checks will go far enough
Many, including some politicians, feel that Social Security COLAs don't do enough to adjust seniors' checks to compensate for inflation. But so far, Congress has shown no signs that it's interested in negotiating a change to how COLAs are calculated. So we have to do our best with what we have.
If you don't feel your Social Security checks go far enough, consider checking into other government benefits like Supplemental Security Income (SSI). This means-tested program run by the Social Security Administration provides money to those 65 and older with "limited resources," as well as the blind and disabled. How much money you qualify for from that program will depend on your income and resources, as well as where you live. You can apply for SSI on the Social Security Administration website.
You may also qualify for additional government aid such as Supplemental Nutrition Assistance Program (SNAP) benefits to help with grocery costs or Medicaid to pay for healthcare. Your state or community may have programs to help seniors and low-income families find affordable housing and pay for utility costs.
If you have any savings or income from a job, you can rely upon these sources as well. Think about the options available to you and, together with your 2024 Social Security estimates, create a financial plan for next year. And if you have any questions about your Social Security benefit after receiving your COLA notice, reach out to the Social Security Administration for more information.
