Newly Released Information on Potential Increase in Social Security Benefits Next Year – Hot

Unless the U.S. government’s September 2023 inflation report drops some kind of unforeseen surprise, you can expect the 2024 Social Security cost-of-living adjustment (COLA) to be somewhere in the neighborhood of 3.2%. That estimate is based on the latest Consumer Price Index readings from the Department of Labor.

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Labor Department data show that the CPI Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 3.4% in August, up from 2.6% in July, The Motley Fool reported. The CPI-W is the index used to calculate annual Social Security adjustments.

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CPI-W changes for July, August and September are added together and averaged, then compared with the Q3 average from a year earlier. The percentage difference is the amount of the COLA, which would be payable in Social Security checks beginning in January 2024.

The higher CPI-W reading in August caused The Senior Citizens League (TSCL), a non-partisan seniors advocacy group, to raise its 2024 COLA estimate to 3.2% from earlier projections of 3.0%.

A COLA of 3.2% would raise the average monthly retiree benefit by about $59. That’s a huge drop from this year’s 8.7% COLA, which pushed the average monthly check up by about $146. The COLA for 2022 was 5.9%. The official 2024 cost-of-living adjustment is expected to be announced on Oct. 12, when the September inflation numbers come out.

As Motley Fool noted, there is a “silver lining” to a 3.2% COLA in that it falls below the 3.3% COLA the Social Security Board of Trustees used as a baseline assumption in its latest analysis of the Social Security trust fund’s financial health.

That fund — officially known as the Old Age and Survivors Insurance (OASI) Trust Fund — is expected to run out of money in about a decade. When it does, Social Security will have to be funded solely by payroll taxes, which currently cover about 77% of benefits.

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A typical newly retired dual-income couple could face a benefit cut of $17,400 when the OASI becomes insolvent, according to estimates from the nonprofit Committee for a Responsible Federal Budget.

A bigger-than-expected COLA in 2024 could accelerate the insolvency timeline, according to The Motley Fool, but a COLA of 3.2% might not have that effect. It would also be the smallest COLA since 2021, though still above the 2.6% COLA average over the last decade.

How would a 3.2% COLA impact Social Security checks? Here’s how the average benefit paid to different groups would change in 2024, according to Social Security Administration data cited by Motley Fool:

• Retired workers: $1,899.16 (an increase of $58.89 a month from 2023)

• Spouses: $918.08 ($28.47 more)

• Survivors: $1,501.02 ($46.54 more)

• Disabled workers: $1,534.41 ($47.58 more)

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This article originally appeared on GOBankingRates.com: 2024 COLA Forecast: New Info About How Much Social Security Benefits Could Increase Next Year