Millions of Social Security recipients will get a 3.2% increase in their benefits in 2024, far less than this year's historic boost. The cost-of-living adjustment, or COLA, means the average recipient will receive more money every month beginning in January, the Social Security Administration said Thursday. About 71 million people—including retirees, disabled people, and children—receive Social Security benefits, per the AP. Thursday's announcement follows this year's 8.7% benefit increase, brought on by record 40-year-high inflation. With inflation easing, the next annual increase is markedly smaller, though senior advocates still applauded the annual adjustment.
"We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important," said AARP CEO Jo Ann Jenkins. Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes was $160,200 for 2023, up from $147,000 in 2022. The social insurance program faces a severe financial shortfall in coming years. The annual Social Security and Medicare trustees report released in March said the program's trust fund will be unable to pay full benefits beginning in 2033. If the trust fund is depleted, the government will be able to pay only 77% of scheduled benefits, the report said.
Legislative proposals to shore up Social Security have not made it past committee hearings. The COLA itself is calculated according to the Bureau of Labor Statistics' Consumer Price Index, or CPI. However, there are calls for the agency to instead use a different index, the CPI-E, which measures price changes based on the spending patterns of the elderly, like health care, food, and medicine costs. Any change to the calculation would require congressional approval.
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