The latest data released today from The Senior Citizens League (TSCL) predicts a rise for the 2024 Social Security cost of living adjustment (COLA) to 3%, a 0.3% increase from its May projection of 2.7% but still far lower than its 2023 high of 8.7%.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the index that is used to determine the COLA, was up just 2.5% year-over-year. Mary Johnson, TSCL’s Social Security and Medicare policy analyst, notes that while inflation continues to moderate, marginally higher rates in the past 12 months likely impacted the recent rise.
“The average inflation rate over the past twelve months rose slightly and thus affected our COLA estimate rising from 2.7% last month to 3% based on the June data,” Johnson said.
Since January of this year, the actual inflation rate, as measured by the CPI-W, was lower than the amount older Americans received in their 8.7% COLAs. The difference should, in theory, provide a modest temporary improvement in buying power.
Yet, high inflation rates over the past two years have left over half of retirees skeptical on whether they would ever be able to recover, Johnson told 401(k) Specialist last month.
According to Johnson, June’s COLA projection of 3% would raise the average monthly benefit of $1,787.00 by a little more than $53.60, however Social Security recipients wouldn’t know the final figure until Medicare Part B premiums are announced. In many years, the Part B premium increase can take most, or even all the COLA, leaving little behind to cover other rising prices, added Johnson.
Steady indexes in June
According to the latest data, the food index rose 0.1% in June, while the food at home index remained unchanged over the month and the food away from home rose 0.4%.
The energy index rose to a steady 6.0% in June after falling 3.6% in May, while the index for electricity increased 0.9% in June and the natural gas index decreased 1.7% over the month. The index for fuel oil also declined in June, falling 9.4%.
The index for all items less food and energy rose 0.2% in June, with the shelter index increasing 7.8% over the last year. The index for motor vehicle insurance and the index for apparel also grew at 1.7% and 0.3%, respectively.
Indexes for airline fares, communication, household furnishings and operations, all fell in June. New vehicles remained unchanged.
Official 2024 COLA coming in the fall
Three months remain until the official 2024 Social Security COLA is determined and announced in the second week of October. The COLA is determined based on inflation in the third quarter, which include July, August, and September, as measured by the CPI-W.
Inflation for those three months is added together and averaged, then compared with the third quarter average from one year ago. The percentage difference between the two is the amount of the COLA, which would be payable for the check received in January 2024.
The next monthly COLA forecast update will be issued on August 10, where the BLS will release data for the month of July.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
