COLUMBUS, Ohio — Social Security beneficiaries can expect a 3.2% increase in their benefits next year, according to the Social Security Administration. This raise is notably smaller than the previous two years. Approximately 71 million Americans receiving Social Security and Supplemental Security Income (SSI) benefits will see their monthly payments rise by an average of more than $50 in 2024.
This increase is welcome news for retirees and beneficiaries. However, it is crucial to note that the Social Security program faces financial challenges. In March, the Social Security Administration warned that the program would fall short on funds for all beneficiaries by 2034, a year earlier than previously projected. The growing benefits and slower income growth have contributed to this situation. Since 2010, Social Security’s cost has consistently exceeded its non-interest income.
The 3.2% cost-of-living adjustment scheduled for January 2024 is smaller than the 8.7% increase this year and the 5.9% bump in 2022. As of August 2023, the average monthly benefit for Social Security Old-Age and Survivors Insurance was $1,758.
The annual cost-of-living adjustment is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, as determined by the Department of Labor’s Bureau of Labor Statistics. This index measures inflation. Although inflation hit a 40-year high of 9.1% in June 2022, it has since moderated, partly due to the Federal Reserve’s decision to raise interest rates.
Starting in January, the maximum amount of earnings subject to the Social Security tax will increase to $168,600 from $160,200, reflecting the growth in average wages.
While the increase in benefits is a positive development for retirees, there is a pressing need for Congressional action to address the long-term financial sustainability of the Social Security program. AARP Chief Executive Officer Jo Ann Jenkins stressed the importance of bipartisan efforts to secure the future of Social Security for both current and future retirees. Jenkins also acknowledged that retirees continue to face financial challenges in their daily expenses, making the increase in Social Security checks all the more essential.