What Is the Cost of Living Raise for 2024?
Discover the 2024 cost of living increase. See how annual benefit adjustments help maintain purchasing power against rising costs.
A Cost-of-Living Adjustment (COLA) increases benefits to maintain purchasing power. Its primary purpose is to counteract inflation, ensuring fixed incomes do not erode over time. This annual adjustment reflects changes in the cost of goods and services. Without it, the real value of benefits would decrease as prices rise, impacting recipients’ financial stability.
The 2024 Cost-of-Living Adjustment
For 2024, the Cost-of-Living Adjustment for many federal benefits was 3.2%. This adjustment began with December 2023 benefits, typically received in January 2024. Supplemental Security Income (SSI) recipients saw increased payments start December 29, 2023, due to the January 1 holiday.
This 3.2% increase results in higher monthly benefits. For instance, the 2024 COLA raised the estimated average monthly Social Security benefit for a retired worker by approximately $59. This increased the average monthly benefit to about $1,907. This adjustment helps beneficiaries afford essential goods and services, aligning income with current living expenses.
Who Receives the 2024 COLA
The 2024 COLA primarily impacts millions of Americans who receive Social Security benefits. This includes a wide range of individuals such as retirees, survivors of deceased workers, and those receiving Social Security Disability Insurance (SSDI). Additionally, the adjustment applies to recipients of Supplemental Security Income (SSI), which provides financial assistance to aged, blind, and disabled individuals with limited income and resources.
Other federal programs also adopt the Social Security COLA. These include federal civil service retirement benefits, such as those under the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), and military retirement pay. This COLA is distinct from general wage increases provided by private employers, as it is a specific adjustment for federal benefit programs.
How the COLA is Determined
The Social Security Administration (SSA) calculates the Cost-of-Living Adjustment using specific economic data. This primarily involves the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics (BLS) compiles the CPI-W, which tracks the average change in prices paid by urban wage earners and clerical workers for consumer goods and services.
To calculate the COLA, the SSA compares the average CPI-W from the third calendar quarter (July, August, and September) of the current year to the average CPI-W from the last year a COLA was effective. If the CPI-W increases, that percentage, rounded to the nearest one-tenth of one percent, becomes the COLA. If the CPI-W does not increase or rounds to zero, no COLA is applied, but benefits are never reduced due to a decrease in the index.