Amid record-high inflation, Social Security beneficiaries will get an 8.7% increase in their benefits in the year 2024, the highest increase in the last 40 years. The Social Security Administration announced the change on October 2024 in the USA. It will result in a benefit increase of more than $140 per month on average starting in January 2024. Social Security benefits are set to rise by 8.7% by 2024, the 4th biggest increase since automatic inflation adjustments were introduced in 1975.
This cost-of-living adjustment will boost the average monthly checks retirees receive in January 2024 by $146 to $1,827, as per the Social Security Administration. That builds on last year’s 5.9% Social Security Cola 2024 increase, which was the largest bump since 1982. Before then, Cost-of-Living Adjustment increased by an average of 1.7% annually from 2010 to 2020.
What is a Cost-of-Living Adjustment (COLA)?
A cost-of-living adjustment (COLA) is an increase made to Social Security and Supplemental Security Income (SSI) to counter the effects of rising prices in the economy also known as inflation. Cost-of-living adjustment is typically equal to the percentage increase in the Consumer Price Index for UWE and Clerical Workers (CPI-W) for a specific period.
The Consumer Price Index represents the average prices of a basket of goods and is used to measure inflation. The cost-of-living adjustment for 2024 is 8.7%, meaning for someone who received $10,000 in Social Security benefits in 2024, their 2024 annual benefit will be a total of $10,870.
Additional Social Security Changes for 2024
On top of the 8.7% benefit increase for 2024, SS recipients will see the following additional changes starting in January 2024:
- Maximum earnings subject to the SST will increase to $160,200 from $147,000 in 2024.
- The maximum earnings working recipients under full retirement age can earn before a reduction in benefits will be $21,240 versus $19,560 in 2022.
- The maximum SS monthly benefit for a worker retiring at full retirement age in the year 2024 will increase from $3,345 to $3,627.
- The average SS benefit paid in 2024 increases to $1,827 from $1,681 last year the disabled workers will also see a rise from $1,364 per month to $1,483.
- It now takes $1,640 to earn a single SS credit, up $130 from 2024.
What is Cost-of-Living?
The cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare during a particular place and period. The cost of living is often used to compare how expensive it is to live in one city compared to another. Cost of living i.e. living expenses are linked to salary or wages. For example, if expenses are high in a city like New York, the wage level must also be high, so that people can be able to live there.
Living Expense Index
The Living Expense Index compares the subsistence in a large city to that of any other metropolitan area. The index covers various subsistence-related expenses, forming a group measure that the workforce can use as a benchmark. Different indices can calculate living expenses in different ways. For example, in 2018, the Council for Community and Economic Research found San Diego to be the most expensive city, not New York City. The council’s Cost of Living Index measured prices in 269 urban areas for expenses such as housing, groceries, utilities, transportation, and healthcare, even getting a haircut or going to the movies
Social Security Cost-of-Living Adjustment Increase 2024
| Categories In Tax Rate | The year 2024 | Year 2024 |
| Employee | 7.65% | 7.65% |
| Self- Employed | 15.30% | 15.30% |
| Maximum Taxable Income | Not Available | Not Available |
| Medicare | No Limit | No Limit |
| Social Security Only For OASDI | $147,000 USD | $160,200 USD |
| Retirement Income Exam With Exempted Amounts | Not Available | Not Available |
| Under Full Retirement Plan | $19,560 USD Per Year | $21,240 USD Per Year |
| Reaching Retirement Age This Year | $51,960 USD Per Year | $56,520 USD Per Year |
| Social Security Disability Thresholds | Not Available | Not Available |
| Non-Blind Candidates | $ 1,350 USD Per Month | $1,470 USD Per Month |
| Blind Candidates | $ 2,260 USD Per Month | $ 2,460 USD Per Month |
| Trial Work Period Candidates | $ 970 USD Per Month | $ 1,050 USD Per Month |
| Full Social Security Benefit: At The Retirement Age | Not Available | Not Available |
| Supplemental Security Income Federal Payment Mode Standard | Not Available | Not Available |
| Independent | $ 841 USD Per Month | $ 914 USD Per Month |
| Couple | $ 1,261 USD Per Month | $ 1,371 USD Per Month |
| Supplemental Security Income Limits of Resource | Not Available | Not Available |
| Independent | $ 2,000 USD Per Month | $ 2,000 USD Per Month |
| Couple | $ 3,000 USD Per Month | $ 3,000 USD Per Month |
| Supplemental Security Income Exclusion For Students | Not Available | Not Available |
| Monthly Limit | $ 2,040 USD | $ 2,220 USD |
| Yearly Limit | $ 8,230 USD | $ 8,950 USD |
| Average Monthly Social Security Benefits To Be Paid In Jan 2024 | Before COLA 8.7% Benefits | After COLA 8.7% Benefits |
| Retired Applicants | $ 1.681 USD | $ 1,827 USD |
| Aged Couple Both Having Benefits | $ 2,734 USD | $ 2,972 USD |
| Widowed Mother of Two | $ 3,238 USD | $ 3,520 USD |
| Aged Widow Living Alone | $ 1,567 USD | $ 1,704 USD |
| Disabled Worker, Partner with One or More Children | $ 2,407 USD | $ 2,616 USD |
| All Disabled Applicants | $ 1,364 USD | $ 1,483 USD |
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