According to the Social Security Administration (SSA), 50% of Americans age 65 or older receive at least half of their family income from Social Security and/or Supplementary Security Income (SSI) benefits. And 25% of them rely on these payments for 90% or more of their income.
Recognizing that persistent inflation continues to erode the purchasing power of seniors, the SSA is giving Social Security and SSI recipients a 3.2% cost of living adjustment (COLA) for 2024.
According to the SSA, this adjustment will result in an average increase of more than $50 per month.
While this COLA is significantly higher than the average adjustment over the past decade, it’s less than half of the near-record increase of 8.7% in 2023.
How is the COLA calculated?
The COLA is based on the annual increase of inflation as measured by the Consumer Price Index for Urban Wager Earners and Clerical Workers. The annual period covered started in the third quarter of 2022 and ended in the third quarter of 2023.
The potential impact of Medicare premiums
For seniors on Medicare, the benefit of an increased COLA will be somewhat blunted by rising Medicare premiums. For 2024, the basic monthly premium for Medicare Part B will rise to $174.70, an increase of $9.80 from $164.90 in 2023. Generally, Medicare premiums are deducted from Social Security payments, so seniors’ net monthly benefit will be less.
This article was authored by Joelle Spear and Jeffrey Briskin. Joelle is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or firstname.lastname@example.org. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
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