Inflation Has Cooled. So Has This Social Security Estimate

Recipients may see 2024 cost-of-living adjustment of just 2.7%, down from this year's 8.7%
By Jenn Gidman,  Newser Staff
Posted Jun 14, 2023 6:21 AM CDT
As Inflation Cools, So Does Social Security's COLA Outlook
Stock photo.   (Getty Images/SARINYAPINNGAM)

This year's Social Security cost-of-living adjustment, or COLA, was the highest in four decades, coming in at 8.7% to account for record inflation. Beneficiaries shouldn't expect quite such a boost for 2024. According to new government data, the annual inflation rate fell in May to its lowest level in two years, which will likely lead to what USA Today calls the "double-edged sword" of a much lower COLA next year. The estimate, based on data from the consumer price index, per the nonpartisan Senior Citizens League: 2.7%, or about a third of last year's COLA.

Just last month, the 2024 COLA estimate was coming in at 3.1%. Over the past decade, the average Social Security COLA was 2.6%, Mary Johnson, an SCL policy analyst, tells NBC News. Why this development is concerning to Social Security recipients, per Johnson, is that although inflation is cooling, prices are still high, especially when it comes to health care, utilities, transportation, and insurance. "That part of it is still very problematic for retirees and disabled Social Security beneficiaries who are living on fixed incomes," she notes. In fact, during the recent inflation spike, Census Bureau stats show that seniors were the only demographic that saw its poverty share increase from 2020 to 2021.

The COLA estimate is still subject to change, though that means it could go higher or lower, Johnson tells NBC. Some senior advocate groups have lobbied to have the subset of the CPI that this estimate is based on shifted from the CPI for urban wage earners and clerical workers, or CPI-W, to the CPI for the elderly, or CPI-E, which they say would more accurately reflect what this more vulnerable group spends its money on, says Richard Fiesta of the Alliance for Retired Americans. The COLA is set to be announced in October and would go into effect in January. (More Social Security stories.)

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