No one expected the 2024 Social Security and Supplemental Security Income benefits to jump anywhere near 2023’s 8.7% increase. Those expectations were realized when the Social Security Administration (SSA) announced Thursday morning that the increase for 2024 will be 3.2%.
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That number is closer to the long-term changes in the SSA’s cost-of-living allowance (COLA) over the past 15 years. In 2008, COLA rose by 5.8%, the biggest increase since 1981’s jump of 7.4%. The high for the past 50 years was 14.3%, posted in 1980 when the inflation rate for the year was 13.55%. U.S. inflation is running at 3.7% through September 2023. (See the cities where your Social Security gets eaten up fastest.)
Source: Source: St. Louis Federal Reserve Bank
Calculating COLA
COLA is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The 2024 COLA is determined on CPI between the third quarter of last year and September of this year. Does it go without saying that if there is no increase, there is no change?
The Bureau of Labor Statistics in the Department of Labor determines CPI-W. By law, it is the official measure the Social Security Administration uses to calculate COLAs.
Making Social Security Solvent
The maximum amount of earnings subject to the Social Security payroll tax (12.4%) will rise from $160,200 to $168,600. That tax only applies to income between $168,600 and an upper limit of $250,000. People earning more than that do not pay the tax on a dollar more than $250,000.
According to a Congressional Budget Office report from last December, raising the cap to include earnings above $250,000 assures that the Social Security Trust Fund remains solvent through 2046. Congress would have to make this change, so that is unlikely to happen anytime soon.
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