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Wednesday, February 28, 2024

Social Security payments are going up in 2024

Social Security payments are going up in 2024

Key takeaways 

The 3.2% COLA increase, now in effect, could put an additional $50 (or more) in the pockets of Social Security recipients each month.

01.19.2024

Learn about Social Security cost-of-living adjustments

Gas, groceries, and goods aren’t the only things going up these days.

Social Security benefits are, too.

While rising inflation is causing millions of Americans to watch their spending, retirees will be getting some much-needed financial relief in 2024. On October 12, 2023 the U.S. government announced people collecting Social Security will receive a cost-of-living adjustment (COLA) of 3.2%.

The 3.2% COLA increase, which started in January, could put an additional $50 (or more) in the pockets of Social Security recipients each month.

Why is Social Security going up?

When costs heat up, COLAs do as well.

Every year since 1975, Social Security benefits have been reviewed and recalculated to help keep pace with inflation. It’s a way to protect the purchasing power of payments so they don’t lose their strength when things become more expensive. But if there’s no inflation, like in 2009, 2010 and 2015, there’s no COLA.

The Social Security Administration (SSA) analyzes data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to set the annual COLA. In general, the CPI-W measures the average cost changes for a variety of common products and services, like food, clothing and transportation.1 If there is least a 0.1% increase when comparing third-quarter numbers with the same period from the previous year (July, August and September), Social Security benefits will see some sort of spike.2

The largest jump in history occurred back in 1980 when the COLA skyrocketed to 14.3%.

Will I get more from Social Security in 2024?

It depends.

Many people (70%, actually) elect to have their Medicare Part B premiums automatically deducted from their Social Security checks.3 If you fall into this group, there is a chance a Medicare rate hike could offset any extra you receive from a cost-of-living adjustment.

The standard monthly Part B premium will be $174.70 in 2024, an increase of $9.80 from $164.90 in 2023. The standard monthly Part B premium will be $174.70 in 2024, an increase of $9.80 from $164.90 in 2023.4

Also, a higher COLA actually could do more harm than good for some individuals. If you’re a low-income senior, you may be looking forward to a bigger Social Security benefit because it may put more money in your wallet. But it could also put you above the legal income limits to qualify for certain government assistance programs, including food stamps, or even require you to pay taxes on your benefits.5

A man sits looking at mobile phone and writing


Will a bigger benefit be enough to fund my retirement?

In 2021, roughly 65 million Americans received Social Security payments, according to the latest report from the SSA.6 In 2024, the average Social Security check will provide $1,907 in monthly income. That's up from $1,848 in 2023.7

However, Social Security was never designed to be a person’s sole or most prominent source of income once retired.8 Many financial professionals suggest you’ll need to have saved about 80% of your working income to cover your cost of living in retirement, and Social Security should help with a portion of that because it’s based on your total lifetime earnings. It’s a good idea to contribute to a 401(k) plan, an IRA or another tax-advantaged type of investment account to help grow your nest egg.  

What if I don’t plan on collecting Social Security in 2024?

You can begin collecting Social Security checks as early as age 62. But if you’re not ready to file in 2024, you may get the best of both worlds. Not only will your benefits be higher the longer you wait to claim, but you’ll also be able to cash in on next year’s estimated COLA increase. You become eligible for COLA increases starting with the year you turn 62, even if you don’t apply until age 70. That’s because “inflation adjustments are baked into future payments” until you eventually draw.9

Where can I access my Social Security account?

You can visit ssa.gov to manage your account or, if you haven’t already, create a username and password. Once you’re logged in, you’ll be able to view your profile page, earnings history, and estimated benefits.

1 CNBC. “High inflation points to bigger Social Security cost-of-living adjustment for 2023.” March 2022.

2 AARP. “What’s the Cost of Living Adjustment for Social Security?” October 2021.

3 AARP. “What’s the Cost of Living Adjustment for Social Security?” October 2021.

4 CMS. “2024 Medicare Parts A & B Premiums and Deductibles.” October 2023.

5 CNN. “Social Security checks could grow by about $175 a month as the cost of living continues to surge,” July 2022.

6 Social Security Administration. “Understanding the Benefits.” 2022.

7 Motley Fool. “You'll Never Guess What the Average Social Security Benefit Will Be in 2024.” December 2023.

8 Social Security Administration. “Understanding the Benefits.” 2022.

9 USA Today, “Social Security benefits hike could bring retirees extra $1,800 in 2023,” August 2022.

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