2024’s Social Security COLA increase might top earlier estimate

The next cost-of-living increase for Social Security recipients is projected to be slightly better than previously estimated, but still the lowest in years, the Senior Citizen’s League predicts. The Senior Citizen’s League (TSCL), a nonpartisan senior advocacy group, had estimated in mid-June that 2024’s COLA increase could be somewhere around 2.7% — a huge drop-off from 2023’s 8.7% increase. The group’s revised estimate, issued Thursday following the publication of the Labor Bureau’s Consumer Price Index for Urban Wage Earners (CPI-W), now puts that number at 3%, they say. Three percent, however, would still amount to the lowest COLA increase since 2020. “There are still three more months of data before the COLA is announced in October, and this estimate could change,” TSCL wrote in a Thursday news release, warning that CPI-W data in the coming months could still swing the percentages lower. TSCL’s latest, slightly larger estimate comes despite cooling inflation, which generally has the opposite effect on Social Security benefit adjustments: For instance, soaring prices on consumer goods and services in 2022 fueled 2023’s benefits increase of 8.7%, to keep pace with inflation. But, even when taking the higher 2024 estimate into consideration, representatives for TSCL have said that the CPI-W — an index which estimates the average cost for consumer goods and services, and which the Social Security Administration uses to calculate yearly COLA increases — is not necessarily a good metric for determining the average senior’s spending habits. Specifically, TSCL said the CPI-W does not reflect the “stubbornly high” prices that seniors continue to pay on key items, including prescription drugs, food, housing or dental services (which are generally not covered by Medicare). “Inflation is moderating, but a lower inflation rate has not necessarily meant that prices have decreased” for those items, TSCL wrote in a study published in May. Social Security benefits have lost about a third of their buying power since 2000, even when accounting for every COLA increase over the last 22 years, TSCL added. TSCL also noted in Thursday’s news release that Medicare Part B premiums, which are automatically deducted from Social Security checks, have yet to be announced. “In many years, the Part B premium increase can take most, or even all, the COLA leaving little else to cover other rising prices,” TSCL wrote. Mary Johnson, the Social Security and Medicare policy analyst for TSCL, told Nexstar in 2022 that the Social Security Administration may need to reanalyze how COLA increases are determined. “It’s not like we have a target number we were hoping for. We want to see an approach that’s more comprehensive than that,” Johnson said. “People are also living longer lives in retirement, so it’s hard for anyone to save for that.”