After a historic 8.7 percent Social Security COLA in 2023, many of you might be wondering what we can expect in 2024. Several factors will combine to determine that exact figure, which will be announced by the Social Security Administration in October. Here’s what we know so far…
Economic Recovery: As the global economy continues to recover from the impact of the COVID-19 pandemic, various sectors are regaining stability. A recovering economy may contribute to a moderate rise in inflation, potentially impacting the 2024 COLA.
Inflationary Pressures: The Federal Reserve’s monetary policy, government spending, and supply chain disruptions can all influence inflation rates. Though central banks attempt to control inflation, certain factors may be beyond their immediate control, impacting the COLA calculation.
Cost of Essential Goods and Services: The prices of essential goods and services, such as housing, healthcare, and fuel, play a significant role in the COLA calculation. Any significant changes in these sectors could sway the final COLA figure.
For Social Security beneficiaries, the 2024 COLA can have both positive and negative implications. A moderate COLA, in the range of 2.0% to 3.0%, could offer some relief to retirees and disabled individuals by helping them keep pace with inflation. This would allow beneficiaries to maintain their standard of living and mitigate the impact of rising costs.
However, it’s important to remember that inflation can affect different demographic groups unequally. Seniors and individuals with fixed incomes may feel the pinch of rising prices more acutely, particularly if they heavily rely on Social Security benefits to cover their daily expenses.
The projected moderate increase of 2.0% to 3.0% could provide some relief, but it may not fully offset the rising costs of essential goods and services.
Ultimately, maintaining financial security in retirement relies on careful budgeting, prudent investments, and awareness of economic trends. By staying informed and planning ahead, Social Security beneficiaries can better navigate the ever-changing financial landscape and make informed decisions to secure their future. Remember to schedule regular meetings with us to update your retirement plan.