Because the once red-hot inflation rate has cooled off, seniors and disabled Americans who qualify for monthly Social Security benefits and Veterans who are receiving disability payments will get a lower Cost of Living Allowance (COLA) increase in 2024 than they did this year.
In 2023 with post-pandemic inflation still raging, Social Security and VA beneficiaries saw a near-record 8.7% increase in benefits. This year, while the inflation rate is still above the Federal Reserve Bank’s target of 2%, it is subsiding and as a result old age and VA and Social Security disability beneficiaries will get a more modest 3.2% bump in benefits next year. The Social Security Administration says, “On average, Social Security retirement benefits will increase by more than $50 per month starting in January.” The 2024 COLA is above the 2.6% average over the past 20 years, according to The Senior Citizens League.
Federal laws stipulate that the amount of money paid to Americans who receive old age and disability benefits must be adjusted annually for inflation. The Social Security Administration uses one of the subsets of the Consumer Price Index (CPI) called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year (July, August, and September) to calculate the Social Security cost-of-living adjustment.
Critics of the CPI-W say it is not an accurate measure of what seniors pay for goods and services. There are increasing calls from some Washington lawmakers to change the measure for the annual increases to the Consumer Price Index for the Elderly (CPI-E) which they argue better measures the prices retirees pay.