Social Security COLA Increase in 2024 Likely to be Smaller

The cost-of-living adjustment (COLA) for social security recipients in 2024 likely will be smaller than in 2023, and there are warnings beneficiaries are losing purchasing power.

In a news release issued last week, Mary Johnson, the Social Security and Medicare policy analyst for The Senior Citizens League, said the COLA for 2024 could be approximately 3.1%.

For years, The Senior Citizens League, a nonpartisan advocacy group for seniors, has based its estimations of  COLA increases on data from the Bureau of Labor Statistics, specifically its Consumer Price Indexes. This data is also used by the Social Security Administration for determining its annual COLA increases.

In 2023, the COLA increase, at 8.7%, was the largest in more than 40 years because of supply-chain disruptions and high inflation. However, analysts for The Senior Citizens League believe a potential decrease in inflation will result in a smaller adjustment for 2024, which could hurt some beneficiaries.

“Inflation is moderating, but a lower inflation rate has not necessarily meant that prices have decreased,” the group wrote in a study published earlier this month.

The group said in the study that “key items” are still at “stubbornly high” prices.

Seniors have different spending habits than younger people, Johnson noted, and the Consumer Price Index does not necessarily reflect the rising costs of items that seniors spend on more often, such as prescription drugs, food, housing, or dental services, which are often not covered by Medicare.

“[Seniors] are spending a bigger percentage of their household budgets [on these expenses]. These costs are not showing up, necessarily, in the COLA. There’s a weakness in the COLA,” Johnson said, according to The Hill.

The group’s most recent study of benefit increases over the past two decades also found that seniors have lost much of their ability to keep up with rising prices. The group found that social security benefits have lost approximately a third of their buying power since 2000.

The official COLA adjustment will not be announced until October and will not go into effect until January, and the group’s projections are subject to change. However, the increase still likely will not be enough to satisfy the needs of seniors, the group said.