Social Security and the 2024 COLA: Everything You Need to Know
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When Americans retire, Social Security benefits help bolster their income — and every year, the government gives the roughly 70 million recipients of those benefits a raise to bring their payments up to speed with inflation.
This cost-of-living-adjustment, abbreviated COLA, is calculated by the Social Security Administration every fall based on the average inflation for the third quarter of the year, which spans from July to September. The bigger the difference is between this and the inflation rate for the previous year, the higher the Social Security COLA will be.
Last year saw an 8.7% increase amid historic inflation from 2021 to 2022. Now that inflation has mostly cooled off, the COLA for 2024 is 3.2%.
It’s crucial for retirees to understand and keep track of changes to their Social Security benefits. Keep reading for more information on the COLA, how it’s calculated and what beneficiaries should expect going into 2024.
What is the Social Security cost-of-living adjustment (COLA)?
As you likely know, the cost of goods and services — like groceries, housing and gas — fluctuate constantly. Retired Americans tend to be especially impacted by rising prices because they often live on fixed incomes, which can result in a gap between household expenses and their planned income from sources like a 401(k) or pension. If retirees have to take more money from their savings to afford rising costs, they run the risk of burning through those funds too soon.
