COLA 2024 Social Security Benefits: A Breakdown of Increases for People with Dependents

2023 saw the highest Social Security increase since 1981, but 2024's adjustment is expected to be lower due to inflation control measures. Stay updated for accurate benefit amounts.

In 2023, the Social Security Administration (SSA) made a significant move by implementing an 8.7 percent Cost of Living Adjustment (COLA), which was the highest annual increase seen since 1981. The purpose of these annual adjustments is to ensure that Social Security benefits keep pace with inflation and maintain the purchasing power of beneficiaries. However, it is expected that the COLA for 2024 will be considerably lower due to the efforts of the Federal Reserve in curbing inflation. The official announcement regarding the 2024 Social Security COLA is anticipated to be made in mid-October.

The importance of the COLA index used for Social Security cannot be overstated. If it fails to keep up with the actual inflation experienced by individuals, their purchasing power will decline. Doug Carey, president and owner of WealthTrace, explains that this has been a recurring issue over the past decade, with the COLA consistently falling short of regular inflation.

The calculation of the Social Security COLA relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks changes in consumer prices for blue-collar American workers, including hourly and clerical workers. According to the most recent CPI-W reading, there has been a 3.4 percent increase compared to the previous year.

To put things into perspective, the average Social Security benefit in August 2023 was $1,705.79. If a three percent COLA were to be applied, this would result in a monthly increase of $51.17, bringing the estimated benefit for 2024 to $1,756.96.

In addition to Social Security, individuals receiving VA disability benefits should also take note of the potential impact of the COLA. Based on the latest estimates, the year-over-year increase for 2024 VA disability pay rates, effective from December 1, 2023, is expected to fall within the range of 2.8 percent to 3.1 percent. The official rate is typically announced on October 13, 2023, and finalized on December 1, 2023. However, it is crucial to remember that these figures are subject to change, and the actual adjustment may vary.

For those who rely on Social Security or VA disability benefits, it is essential to stay informed and updated with official announcements to accurately determine their future benefit amounts. By staying informed, individuals can make informed decisions and plan accordingly to ensure their financial security in the years to come.

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