Social Security beneficiaries may be looking at an increase in their monthly checks come 2024, due to the annual cost-of-living adjustment (COLA). The COLA is designed to help the payouts keep pace with inflation.

While the exact COLA is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as measured by the Bureau of Labor Statistics, preliminary forecasts can be made based on current trends. Assuming that inflation continues along a similar trajectory as seen over the past year, financial experts anticipate a COLA in the range of 1.5% to 3.5% for the year 2024.

This percentage might seem modest, but given that the average monthly Social Security benefit was about $1,543 in 2021, even a 2% increase would potentially raise monthly payments by approximately $30.80. Should the COLA reach as high as 3.5%, that could mean an extra $54 per month for beneficiaries.

Social Security’s COLA can significantly affect personal budgets for millions of Americans who rely on these payments as a substantial part of their income. For some context, over the past decade, COLAs have ranged from zero to just over 5%, with lower figures typically reflecting periods of minimal inflation.

The uncertainty around inflation rates and economic conditions makes it difficult to predict exact amounts more than a few months out. It’s important for anyone relying on Social Security income to pay close attention to official announcements regarding the COLA, which are typically made in the fourth quarter of each year.

The last significant Social Security COLA increase came in 2022 when recipients saw a jump of 5.9%, in response to a sharp rise in inflation rates post-COVID lockdowns. Such dramatic hikes are relatively rare; nonetheless, they highlight how crucial these adjustments can be during economic downturns and periods of high inflation.

The Social Security Administration also works continuously on evaluating and modifying benefits to ensure that they do not lose purchasing power over time due to inflationary pressures.

Therefore, beneficiaries can rest assured that despite variations from year to year, Social Security will continue adjusting monthly checks to support their buying power against an ever-changing economic landscape. And while this provides some comfort, it is also a reminder of the importance of staying informed about such changes and planning accordingly for financial health in retirement years.