2024 COLA estimate increases despite slowing inflation

Despite new consumer price data showing that inflation is slowing, The Senior Citizens League is still increasing its estimate for the 2024 Social Security cost-of-living adjustment.

The consumer price index for urban wage earners and clerical workers (CPI-W), which is used to determine the annual COLA, was up 2.3% year-over-year, according to data released Wednesday by the Bureau of Labor Statistics. However, the average rate of inflation over the last 12 months rose slightly, leading TSCL to bump its COLA estimate to 3%, up from 2.7% in June.

The COLA won’t be announced until October, which means the estimate could change based on CPI-W data released for July, August and September. Inflation rates for these three months are added together, averaged and the compared with the third-quarter average from the previous year. The percentage difference between the two is the amount of the COLA, according to a statement from TSCL.

TSCL did not respond to a request for comment.

A 3% COLA would raise the average monthly benefit of $1,787 by a little more than $53.60, but the final impact on Social Security recipients won’t be known until Medicare Part B premiums are announced.

According to forecasts released by the Medicare Trustees in March, Part B premiums are expected to increase $9.90 in 2024. However, this amount does not include any significant new costs, such as Medicare’s coverage of a new Alzheimer’s drug, TSCL said, which estimates this could add another $5 to monthly premiums.

If inflation continues to slow and the COLA is lower than 3%, the Medicare premium increase could exceed COLA increases, especially for those with the lowest Social Security benefits.