What does that mean and what to expect | ET REALITY

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Payments to Social Security beneficiaries may rise a little more than expected in 2024, but an advocacy group says they still won’t reach what retirees need.

The Senior Citizens League said Wednesday that Social Security’s cost-of-living adjustment, or COLA, will likely be 3.2% by 2024. That would add about $57 to monthly benefits, raising them to $1,790 for the average recipient, according to the group’s estimates.

The cost of living adjustment is calculated based on an average of the inflation readings for the months of July, August and September. Specifically, it is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published by the Bureau of Labor Statistics.

The CPI-W rose 3.6% in July and 3.4% in August.

Inflation soared to 40-year highs in 2022 following a combination of pandemic stimulus payments, increased shopping and spending, and widespread supply chain problems. That led the Federal Reserve to raise interest rates at a rapid pace. The US benchmark interest rate is now the highest in more than 20 years.

That has slowed the economy somewhat in 2023 compared to last year, but inflation remains higher than during the 2010s.

While Social Security benefits increase annually, the Senior Citizens League maintains that the cost of goods and services retirees need is rising much faster than benefits.

The advocacy group says the problem is most acute for older beneficiaries, since people who retired before the year 2000 would need an extra $500 in benefits each month just to regain the purchasing power they had in 2000.

The Senior Citizens League previously said the increase for next year could be as small as 2.7%.

While wages for American workers have been growing and are starting to outpace inflation, that doesn’t help people who have retired and no longer earn a paycheck. And the league maintains that most people retire before they are old enough to receive the full amount of Social Security benefits to which they would be entitled.

The Social Security Administration is expected to announce the official COLA increase in mid-October.

Overall, the U.S. consumer price index rose 3.7% in August, according to BLS data released Wednesday. Prices for consumers rose faster last month primarily because gasoline prices rose, but over the past year, the cost of housing has risen more than 7%. The cost of items such as medications and medical equipment has also continued to rise.

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