Every year since 2002, national pollster Gallup has surveyed retirees to gauge their reliance on Social Security income. In all 22 surveys, between 80% and 90% of then-current retirees noted that they lean on their monthly payout to cover at least some portion of their expenses.
Considering how important Social Security is to the financial well-being our nation's aging workforce, workers with disabilities, and survivor beneficiaries, there's arguably no event more widely anticipated each year than October announcement of the cost-of-living adjustment (COLA).
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Social Security beneficiaries will enjoy another above-average COLA in 2024
COLA is best thought of as Social Security's mechanism that accounts for inflation -- i.e., the rising price of goods and services. If a basket of goods and services commonly purchased by retired workers increases in price, Social Security benefits should, in an ideal world, rise by a commensurate amount to ensure that beneficiaries don't lose any purchasing power. COLA is the tool that takes into account the price changes that beneficiaries are contending with and adjusts benefits accordingly on an annual basis.
Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has served as the program's measure of inflation. The average CPI-W reading from the third quarter (July – September) of the current year is compared to the average CPI-W reading from the third quarter of the previous year to determine if a cost-of-living adjustment will be passed along in the upcoming year. If the average reading in the current year is higher than in the comparable period of the previous year, inflation has taken place and all beneficiaries are due for an increase.
In 2023, Social Security's then-66 million beneficiaries enjoyed a historically high 8.7% COLA. On a percentage basis, it represented the largest year-over-year increase in benefits in more than four decades.
All 67 million Social Security beneficiaries are receiving an above-average COLA in 2024, as well -- albeit not to the same scale as the historic increase from 2023. The 3.2% cost-of-living adjustment passed along in 2024 is modestly higher than the 2.6% average COLA over the previous 20 years.
What will the average Social Security beneficiary take home each month in 2024?
It's one thing to throw around percentages and another to get into the nitty-gritty of what this increase actually means in nominal-dollar terms for the average beneficiary.
Before getting into any calculations, let me preface that I'll be making some educated estimations. The Social Security Administration (SSA) hasn't released the average monthly benefit for all 67 million beneficiaries for January 2024, which means I'll be doing some calculations (that I'll walk you through) to determine the average monthly Social Security check for all beneficiaries.
The first thing to note is that retired workers, workers with disabilities, and survivor beneficiaries are regularly being added to the list of current beneficiaries. These new enrollees tend to incrementally lift the average payout on a monthly basis.
Between January 2023 and November 2023, the average monthly check for all beneficiaries grew from an SSA-reported $1,691.53 to $1,710.78. This difference of $19.25, divided by 10 (to represent the 10-month difference), equates to a roughly $1.93-per-month organic increase. Thus, the average payout would have been expected to grow to $1,712.71 in December 2023, prior to the 3.2% COLA being factored in.
A 3.2% cost-of-living adjustment on $1,712.71 equates to an increase of $54.81 per check. This means Social Security's 67 million beneficiaries entered 2024 taking home an average estimated monthly benefit of $1,767.52, which works out to about $21,210 on an annual basis.
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Here's the average payout for retired workers, workers with disabilities, and survivor beneficiaries in 2024
However, average monthly benefits can vary widely depending on the type of beneficiary receiving the payout. Let's take a closer look at the average Social Security checks for each of the program's three core categories: retired workers, workers with disabilities, and survivor beneficiaries.
America's top retirement program was signed into law in 1935 to protect aging workers who could no longer provide for themselves. As of November 2023, more than 50 million retired workers were receiving a monthly check. Based on estimates from the SSA that were published in mid-October, the average monthly benefit for all retired workers is expected to increase $59 per month to $1,907, as of January 2024. Retired workers receive the highest average monthly benefit among Social Security's three core beneficiary categories.
As of November, nearly 7.4 million workers were receiving long-term disability benefits. According to SSA estimates, the average monthly check for workers with disabilities is expected to climb $48 to $1,537 in 2024, after factoring in the 3.2% COLA.
Lastly, a little over 5.8 million people were receiving a survivor benefit in November. This primarily includes nondisabled and disabled widow(er)s, as well as qualifying children of deceased workers. Though the SSA's "2024 COLA Fact Sheet" doesn't provide an estimate on monthly payouts to survivor beneficiaries, my own calculation points to a $46.59 average increase in 2024 to approximately $1,502 per month.
You may have noticed that these three categories don't add up 67 million beneficiaries. That's because there are more than 2 million spouses and children receiving retirement benefits, as well as over 1 million children bringing home disabled-worker benefits, which I've left out to keep the calculations simple.
But regardless of which category Social Security beneficiaries find themselves in, 2024 represents another year of an above-average cost-of-living adjustment.
