The Social Security Administration announced Thursday morning that Social Security benefits will increase by 3.2% in 2024.
That adds about $50 to the average monthly retirement benefit consumers receive starting in January. The annual increase is called the cost of living adjustment, or COLA.
Social Security recipients will begin receiving the increased payments on Dec. 29, the agency said.
“Social Security and SSI benefits will increase in 2024, which will help millions of people make ends meet,” said Acting Social Security Commissioner Kilolo Kijakazi.
Cost-of-living adjustments are calculated based on the average of July, August and September inflation data. Specifically, it is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published by the U.S. Bureau of Labor Statistics.
According to the latest inflation data released by the Bureau on Thursday, CPI increased by 2.6%, 3.4% and 3.6% respectively in July, August and September.
“Retirees can rest a little easier at night as they will soon receive increased Social Security checks to help them keep pace with rising prices. We know that older Americans are still feeling the pinch when it comes to buying groceries and gas. Stings, that makes every dollar count,” Jo Ann Jenkins, CEO of the nonprofit AARP, said in an emailed statement.
However, another advocacy group for older Americans, the Alliance for Seniors, believes a larger increase is needed, especially for older retirees. It argues that the costs of the goods and services they need are growing much faster than Social Security benefits.
The group said people who retired before 2000 would need an extra $500 a month in benefits to regain their 2000 purchasing power.
According to the SSA, by 2023, nearly 67 million people will receive Social Security benefits. The majority are retirees, with nearly 90% of people over 65 receiving these benefits as of June 30.
Inflation surged to a 40-year high in 2022 amid a combination of pandemic stimulus payments, increased shopping and spending, and widespread supply chain issues. This prompted the Federal Reserve to quickly raise interest rates. U.S. benchmark interest rates are currently at their highest level in more than 20 years.
The economy will slow down in 2023 compared with last year, but inflation will still be higher than in the 2010s.