Pamela Kweller RSSA Staff
The September 2023 Consumer Price Index (CPI) report was released today, providing the final calculation for the 2024 Social Security Cost of Living Adjustment (COLA). And the official 2024 Social Security COLA is 3.2 percent.
According to the Social Security Administration, “More than 66 million Social Security beneficiaries will see the 3.2 percent cost-of-living adjustment (COLA) beginning in January 2024.”
The Social Security Administration calculates the COLA based on the increase in the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) in the third quarter of the current year compared to the increase in the CPI-W in the third quarter of the previous year. The third quarter includes July, August, and September. The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor.
The CPI-W was 2.6 percent in July and 3.4 percent in August. And today the U.S. Bureau of Labor Statistics released a statement saying that the CPI-W was 3.6 percent in September, closing out the third quarter and providing the calculation for the 2024 COLA.
This past year’s COLA was 8.7 percent, which was the largest COLA in nearly 40 years. In comparison, the 2024 COLA at 3.2 percent seems so small. However, keep in mind, it is much more than zero percent. COLAs are not guaranteed. There have been years with zero percent COLAs, most recently in 2016.
The average monthly Social Security benefit for all retired workers is currently $1,848. With a 3.2 percent increase, the average monthly Social Security benefit in 2024 will be $1,907.
The maximum monthly benefit for a worker who filed in 2023 at Full Retirement Age FRA is currently $3,627. The maximum monthly Social Security benefit for a worker filing at FRA in 2024 will be $3,822.
Other changes will also take effect. For example, the maximum amount of earnings subject to Social Security taxes will be increased 5.2% in 2024 from $160,200 to $168,600.
Additionally, it will take more income to earn one quarter of coverage or credit. A minimum of forty credits are needed to qualify for Social Security. The amount of earnings required for one credit in 2023 is $1,640. The amount of earnings required for one credit in 2024 will be $1,730.
Stay tuned as we provide more updates on Social Security and the changes coming in 2024.
Photo by Tierra Mallorca on Unsplash