A lower raise in 2024 is not entirely undesirable
At the beginning of 2023, Social Security benefits for seniors increased by 8.7%. That raise was the most significant COLA that had been implemented in decades. Over the past five months and change, it has hopefully assisted some seniors in strengthening their finances and gaining purchasing power.
However, Social Security recipients shouldn’t expect their COLA in 2024 to be comparable to their raise in 2023. The nonpartisan Senior Citizens League predicts a 3.1% Social Security COLA in 2024 based on recent inflation data.
That number, of course, is by no means fixed. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for the third quarter are used to calculate Social Security COLAs. It is far too early to predict the CPI-W readings in 2023 because we have not even reached the third quarter of the year.
Nevertheless, it is evident that inflation has been gradually falling since its peak in the middle of 2022. As a result, the Social Security COLA for 2024 is likely to pale in comparison to this year’s 8.7% increase. However, that isn’t necessarily a bad thing.
At the very least, there is some relief from inflation. It is normal for seniors receiving Social Security to desire a significant increase in 2024. However, a smaller raise is not necessarily harmful because it indicates that inflation is not as severe. In addition, as inflation slows, seniors may have an easier time keeping up with their essential costs in 2024, such as transportation, groceries, and utility bills.
Having said that, now is a good time to start saving extra money for the event that the COLA for next year truly disappoints, given that many senior citizens will receive a much larger Social Security paycheck this year. Unfortunately, many seniors lack savings to supplement their Social Security benefits. Therefore, it is of the utmost significance for those in that boat to make use of their COLA in 2023 by putting aside a portion of that money for eventual emergencies.
Is there a further compelling reason for beneficiaries of Social Security to save more money this year? We are unsure of the Medicare premium increases for the upcoming year. Those can easily reduce Social Security COLAs, so putting more money away now could pay off in 2024 if Medicare costs significantly more.
We won’t know what the raise for next year will look like until October because the Social Security Administration typically announces upcoming COLAs in October. Additionally, there is a possibility that various projections will emerge between now and then. Depending on how the upcoming CPI-W readings look, they could be higher or lower than 3.1%.
However, it is essential to remain realistic and acknowledge that the COLA for 2024 will not even come close to 8.7%. It might not even be half.
Seniors on Social Security might not want to hear that. However, a smaller COLA should, at the very least, provide retirees with some relief from inflation.
This top-rated card still comes with a $200 welcome bonus, unlimited cash rewards, and a generous intro APR on purchases and balance transfers.
After reviewing it, our credit card experts selected this card as the Best No Annual Fee Card of 2023 for a variety of reasons.