As we step into the final months of 2023, a significant number of Americans are keeping a vigilant watch on an important financial matter, the anticipated 2024 COLA increase. The Cost-of-Living Adjustment (COLA) stands as a crucial financial tool in the United States, utilized to determine the necessary increments in benefits such as the payments delivered by the Social Security Administration (SSA), ensuring they keep pace with the ever-fluctuating inflation rates.
Just about a year ago, the 2023 COLA increase took a remarkable leap, recording an 8.7 percent surge, the most substantial year-on-year growth in four decades. However, the outlook for the impending 2024 COLA increase indicates a considerably different scenario, with expectations hinting at an increase of potentially less than half the size of the previous year’s.
2024 COLA Increase For Widowers: The Impact on Benefits
Forecasts from the Senior Citizens League are pointing toward an approximate rise of 3.0 percent, a sharp contrast to the heights reached in the preceding year. Consequently, this suggests that the increments in Social Security benefits will be significantly smaller than what was observed between the years 2022 and 2023.
The realm of COLA stretches its influence across various segments of the U.S. population, affecting retirees, individuals with disabilities, and survivors alike. In the case of widows and widowers, the prospects tied to the 2024 COLA increase carry a shade of disappointment. The impending rise is projected to be notably modest, resulting in a considerably smaller upswing in benefits compared to the previous year.
For instance, if you are a widow or widower currently receiving $10,000 payment in Social Security benefits during 2023, your total benefits for the calendar year of 2024 would likely amount to $10,300. While this marks an increase, it remains notably less substantial than the surge experienced by many beneficiaries at the outset of 2023.
What Is the Impact of a Lower COLA Increase on Widows and Widowers?
A lower COLA increase has a direct impact on the purchasing power of the beneficiaries. Over time, inflation and increasing prices can erode the value of the fixed income received by retirees, making it harder for them to afford basic costs like food, shelter, healthcare, and taxes.
For example, if a widow or widower is receiving $10,000 in Social Security benefits in 2023, and the COLA increase for 2024 is projected to be approximately 3.0 percent, their benefits would increase to $10,300 for 2024. This would be a lesser increase compared to the previous year when the COLA increase was 8.7 percent.
A lower COLA increase means that the benefits for widows and widowers will increase by a lesser amount. This could potentially make it more challenging for them to meet their living expenses if inflation is high. However, it could also be beneficial if it results in lower Medicare premiums and indicates controlled inflation.
Lower Cola Means Lower Inflation: How Is That Good for You?
A lower COLA means that President Joe Biden’s federal government managed to control inflation, which was high for much of the last administration (especially in the COVID-19 pandemic). This is positive for the economy in general, as a high COLA could mean that prices rise quickly, which can cause financial uncertainty.
With a low COLA, Social Security benefits aren’t eroded as much in terms of purchasing power. Beneficiaries can maintain a more stable standard of living without worrying about a significant increase in the cost of living. Also, the federal government will have to devote fewer additional resources to the Social Security system, which ensures its long-term sustainability.
Who Will Get the COLA Increase in Their Payments?
Not everyone who applied for the COLA adjustment will get it, and having Social Security doesn’t guarantee you’ll receive it either. So, who’s in luck? Well, if you’ve applied for retirement benefits after hitting 62 years old, you’re eligible. Specifically, you’ll get adjustments for the years between turning 62 and the date you filed for benefits. But if you claim Social Security right after your 62nd birthday, you might miss out.
So, if you’re receiving the average Social Security retirement benefit of $1,837 per month, you could see an extra $55 per month in 2024. That’s a big jump compared to the previous two years, when it went from 5.9% to 8.7%. In fact, it’s the largest percentage increase in benefits since the early ’80s.