Your 2024 Social Security check will be increasing in October, here’s what you need to know
Payments to recipients of Social Security are rising by 3.2% effective in January 2024. This is a smaller increase than Social Security saw last year, and isn’t expected to be treated as a “bonus” but rather to keep up with the current inflation rate. CNBC Select is running through what you need to know about Social Security’s cost of living adjustment.
What is Social Security’s COLA?
The 2024 cost-of-living adjustment (COLA) is an increase to Social Security benefits tied to the current rate of inflation. As inflation increases, the costs of goods and services increase along with it, so the Social Security Administration (SSA) provides an annual cost-of-living adjustment to ensure the Social Security benefits match the rate of inflation. Here are the annual percentage increases to Social Security benefits for the last five years:
- 2018-2.8%
- 2019-1.6%
- 2020-1.3%
- 2021-5.9%
- 2022-8.7%
The Social Security 2024 COLA increase is 3.2%, which is down from the previous year’s increase of 8.7%. The average Social Security benefit as of August 2023 is $1,705.79, which means that will rise to $1760.37 with this most recent increase.
While this increase is significantly smaller than the 2022 increase of 8.7%, it’s important to put it in context — and the largest increase in over 40 years since 1981′s increase of 11.2%. The past five increases, excluding this latest one, average out to a 4.06% increase in benefits, closer to this year’s number.
How is the cost-of-living adjustment calculated?
Ever since 1975, the Social Security COLA has been based on the Bureau of Labor Statistics (BLS) consumer price index, which is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.” Specifically, the SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as the reference point for any cost-of-living adjustments. The CPI-W places a slightly higher weight on food, apparel, transportation, and other goods and services compared to other metrics. It also places a slightly lower weight on housing, medical care, and recreation.
What does this mean for me?
In short, this means that anyone who receives benefits from Social Security will see an increase in their check. It’s important to remember that this shouldn’t be considered a bonus, but an adjustment to keep in line with inflation, so it’s still important to be financially responsible. One possible place to put any additional money is in a high-yield savings account. These accounts let your money earn interest at a much higher rate than it would in traditional savings accounts (which helps protect your savings from inflation), plus they’re FDIC-insured and let you access your funds quickly and easily.
One of CNBC Select’s top-ranked high-yield savings accounts is the LendingClub High-Yield Savings account, which charges no monthly fee and has no minimum balance requirement beyond the initial $100 deposit to open the account. It’s a great place to store an emergency fund you can use to quickly cover any surprise expenses.
Your 2024 social security check is increasing: here's how much to expect
Your 2024 Social Security check will be increasing in October, here's what you need to know
