We’re mere days away from finding out what the official 2024 Social Security cost of living adjustment (COLA) will be, with the smart money betting the “over” on 3% and the “under” on 3.5% (if Las Vegas were to offer such a line).
With a partial government shutdown averted last-minute that could have delayed the COLA announcement, the runway is now clear for the Social Security Administration to release the official 2024 COLA on the morning of Thursday, October 12, shortly after the Bureau of Labor Statistics drops the September Consumer Price Index data—the final variable used to compute next year’s COLA.
The CPI Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to calculate the annual adjustment. CPI-W changes for the months of July, August and September are added together and averaged, then compared with the Q3 average from the prior year. The percentage difference is the amount of the next year’s COLA.
So what will it be? We know based on slowing inflation rates this year that it will be considerably smaller than this year’s 2022 inflation-fueled historic 8.7% increase, which meant an average monthly Social Security check increase of $146.
In its final forecast based on CPI-W data in advance of September data being released, the Senior Citizens League’s Mary Johnson predicted the 2024 COLA would be 3.2%, which if it comes to fruition would raise an average monthly retiree benefit of $1,790 by $57.30—almost $90 less per month than this year’s increase.
“Inflation isn’t going down; it’s just slowing. Although prices aren’t increasing as fast as a year ago, prices are still higher than one year ago,” Johnson said in a TSCL newsletter addressing the 2024 COLA situation.
A 3.2% increase would be still be significantly higher than the 2.6% average increase beneficiaries have received over the past 20 years. Since 2020, the annual COLA has checked in at 1.6% (2020), 1.3% (2021), 5.9% (2022) and 8.7% (2023). In both 2010 and 2016 there was no COLA increase (0.0%), and the biggest increase ever was 14.3% in 1980.
In addition to next Thursday’s 2024 COLA announcement, the Social Security Administration is also expected to release an updated “fact sheet” on Oct. 12 detailing other changes to Social Security, including the wage cap, earnings test limits and Social Security disability thresholds.
The amount of income subject to Social Security payroll tax or wage cap is $160,200 in 2023, but it is expected to be increased to $167,700 for 2024 according to this year’s Social Security Board of Trustees report. The earnings test exempt amounts are also expected to increase, as is the maximum Social Security benefit.
Medicare Part B’s role
It is worth mentioning that a likely hike in 2024 Medicare Part B premiums has the potential to kneecap whatever the Social Security COLA raise ends up being. That’s because seniors enrolled in Medicare and Social Security have their Part B premiums automatically deducted from their monthly Social Security checks.
While the cost of Medicare Part B actually went down slightly for 2023, that’s not expected to happen for 2024. Monthly Medicare Part B premiums in 2023 cost $164.90, with an annual deductible of $226. The Centers for Medicare & Medicaid Services (CMS) hasn’t yet officially released how much Part B will cost in 2024, but the annual Medicare Trustees report released back in March forecast that the monthly deductible would rise by 6% or nearly $10 to $174.80 in 2024.
But as The Senior Citizens League points out in its recent newsletter, that estimate doesn’t include any significant new costs after the estimate is released.
“One of the most significant new costs could be Medicare’s coverage for another new Alzheimer’s drug, lecanemab, known by the brand name Leqembi—which is expected to cost $26,000 per year without insurance,” the newletter states. “Based on spending estimates, we forecast that the drug and related Part B services required to administer and monitor the patient for dangerous side effects would add about $5 per month to the Part B premium for everyone, potentially raising the 2024 premium to about $179.80 per month.”
Altogether, TSCL said most beneficiaries may see their Part B premium rise by about $15 per month from 2023.
SEE ALSO:
- Updated 2025 Social Security COLA Forecasts Point Toward Lower Raise
- Final 2024 Social Security COLA Estimate Before the Real Thing: 3.2%
- Dems Reintroduce Bill to Shield Social Security Payments from Garnishment
- Biggs: Social Security Exaggerates Shortfall of Retirement Income Replacement Rate
- Absent Action, Typical Couple Faces $17,400 Social Security Benefit Cut in 2033