(MENAFN) Seniors and other Social Security beneficiaries receive an annual cost-of-living adjustment (COLA) that aims to align their monthly checks with inflation. This year, that COLA could be as high as 3 percent, or even lower, according to an early estimate from the Senior Citizens League. This estimate is based on the 12-month average rate for the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a basket of goods and services typically bought by workers.
Mary Johnson, the Social Security and Medicare policy analyst at the Senior Citizens League, notes that the 12-month average rate for CPI-W has been declining, even when inflation increased month-to-month, as it did in January. Although inflation trends could change, price increases are now easing despite remaining well above the Federal Reserve's target of 2 percent annually.
Based on February inflation data, the COLA looks like it will be below 3 percent and could fall into the 2 percent or even lower range by the third quarter if that 12-month average continues to decline, according to Johnson. Her group will issue an official forecast for the 2024 COLA in May.
The Social Security Administration bases its COLA on the percentage increase in the CPI-W in the third quarter compared with the prior year. If there's no increase between the two figures, there's no COLA adjustment, the agency says.
Johnson notes that inflation was at the highest level in 40 years in 2022, making it important to remember that for there to even be a COLA in 2024, inflation would have to exceed that. However, there is every chance that won't happen. Johnson would be happy if there is a modest COLA and then inflation finally goes negative, with prices dropping to a more typical growth pattern by the end of the year.
While a lower COLA might be disheartening for Social Security beneficiaries, it's important to remember that the program is still a valuable resource for millions of Americans. The COLA is just one component of Social Security, which provides a guaranteed source of income for retirees and people with disabilities. As such, it remains a vital safety net for many vulnerable individuals and families in the United States.
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