Confirmed changes to Social Security in 2024: A new benefit increase will be announced on

The Social Security Administration (SSA) confirmed major changes in 2024, as a new benefit increase will be announced soon. Social Security makes millions of payments to persons who are disabled or have already retired, with some of them falling under the category of Supplementary Income Insurance (SSI) or Social Insurance Disability Insurance (SSDI).

Social Security is relevant for millions of Americans since most of the beneficiaries rely on these monthly checks to cover their daily living expenses. As a result, the Social Security Administration must make many changes each year to protect beneficiaries from financial loss, especially in countries with high rates of inflation.

Inflation impact on the cost of living adjustment (COLA)

The cost of living adjustment (COLA) is calculated based on consumer prices for active workers. The Social Security Administration uses this population sample to calculate the growth in payments by analyzing the consumer price index and calculating the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The federal agency then compares the CPI-W of the third trimester of the current year with the results of the previous year. Therefore, this difference will determine the next year’s COLA increase. The COLA for 2024 was set for October 2023 at 3.2%.

The new Social Security benefit increase

Congress included the COLA program as one of the Social Security reforms in 1972, and it has automatically adjusted benefits since 1975. The purpose of the program is to ensure that the purchasing power of beneficiaries is not eroded during periods of inflation. These changes were necessary because increases before 1975 were only authorized by Congress.

The Motley Fool estimates that there is a good chance that the COLA for 2025 will be higher than 2.6%, which is a high average over the past 20 years, and suggests that inflation could reach 3% by then. However, it cannot be provided as an echo because there is a lack of quarterly data to support this assertion. 

In addition, if housing prices continue to rise along with high interest rates, it will decrease home purchases leading to a potential market stagnation and slowing economy.  With this in mind, retiree benefits could increase by approximately $60 per month, from $1907 to $1967. However, this amount is subject to change due to the continuing decline in inflation and the fact that the necessary statistics will not be available until the third quarter of this year.

Social Security will be responsible for notifying recipients about COLA increases

Social Security is required to begin notifying program participants of the revised amount of their benefits in early December. You can also check the 2025 COLA future increase by accessing your “my Social Security online account” for further information. It is important to note that as a result of this 3.2% increase, 7.5 million SSI recipients will begin receiving an adjustment in December 2023, and over 66 million individuals will receive adjustments to their Social Security benefits beginning in January 2024. This similar schedule, with one adjustment and one fixed value, is expected to be followed through 2025.

In terms of Social Security, Medicare enrollees are provided with a list of changes made to the system, along with a list of resources for updated medical services and medications. Other financial firms claim that despite the lack of CPI-W quarterly data, the 2025 COLA will be even lower than this year’s because of the expected cooling of inflation, which is expected to increase by 1.4%, as the 2021 and 2022 COLAs were among the highest since 1981, indicating that the economy is expanding and reducing ongoing inflation.