For Immediate Release:
August 10, 2023
The Social Security cost of living adjustment (COLA) for 2024 is looking increasingly like it may be around 3%, based on consumer price data released today, according to The Senior Citizens League (TSCL). Overall, the inflation rate in July is significantly lower than a year ago. However, most older Americans report that persistently high prices still affect their household budgets, according to results from a new survey by TSCL.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the index that’s used to determine the COLA, was up 2.6% year over year. However, the average monthly inflation rate has risen slightly, especially since January of this year, keeping the COLA estimate at 3% based on July price data.
July CPI data is important because the COLA is calculated based on inflation during the third quarter — July, August, and September as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Inflation for those three months is added together and averaged, then compared with the third quarter average from one year ago. The percentage difference between the two is the amount of the COLA, which would be payable for the check received in January 2024. The 2023 COLA computation can be found on the Social Security website.
A COLA of 3% would raise an average monthly benefit of $1,789 by $53.70.
In 2023 Social Security recipients received the highest COLA in more than 40 years, but 79 percent of retirees report that lingering high prices continue to impact household budgets significantly. Here are responses from The Senior Citizen League’s most recent Retirement Survey launched mid - July 2023:
“How would you characterize your monthly budget for essential items (housing, food, and prescription drugs) over the past 12 months?
|Higher than this time a year ago.||79%|
|About the same as this time a year ago||9%|
|Lower than a year ago||7%|
Total 1,759 survey participants.
High costs have significantly impacted older Americans’ ability to access healthcare. When asked, “Have you ever postponed or gone without medical services or products due to cost? Over 66 percent of survey participants said they had postponed dental care, including major services such as bridges, dentures, and implants. Forty-three percent said they have delayed optical exams or getting prescription eyeglasses. Almost one-third of survey participants said they have postponed getting medical care or filling prescriptions due to deductibles, out-of-pocket costs, and unexpected bills.
Persistently high prices aren’t the only problem. Findings from the new survey suggest more than one in five Social Security beneficiaries (23%) report they paid tax on a portion of their benefits for the first time this past tax season. The tax return for 2022 reflected a 5.9% COLA increase in Social Security benefits. We expect the number who pay tax on a portion of their Social Security benefits to jump even more as next year’s tax season reflects the 8.7% COLA increase in 2023.
The question asked:
If you have received Social Security for over three years, did you pay federal income tax on a portion of your Social Security benefits for the first time this tax season? (April 18, 2022.)
|Not applicable, have not received Social Security for more than three years.||11%|
Note to journalists: The Senior Citizens League will issue our final estimate of the 2024 COLA on September 13, 2023. Please allow extra time for me to perform the probability analysis, which enables us to provide the most accurate forecast you rely on. The COLA announcement is expected to be October 12, 2023, barring any unforeseen delays from a government shutdown. (Yes, it happened before in 2013.) — Mary Johnson