August CPI pushes 2024 COLA forecast up 3.2%

The Social Security cost of living adjustment for 2024 will likely be 3.2% based on a jump in consumer price data through August, according to the Senior Citizens League. The resulting increase would raise the average monthly retiree benefit of $1,790 by $57.30. The Social Security Administration is slated to announce the COLA for 2024 in October. 

On a relative basis, a 3.2% COLA is far lower than the 8.7% received in 2023, the highest COLA in more than four decades. That said, it is still higher than the 2.6% average over the past 20 years.

Driven by a spike in energy prices, the consumer price index rose 0.6% in August, its biggest monthly gain of 2023 and up 3.7% from a year ago. Meanwhile, the core CPI increased 0.3% and 4.3% respectively, against estimates for 0.2% and 4.3%.

The law states that the annual inflation adjustment is based on the average inflation during July, August, and September as measured by the CPI for Urban Wage Earners and Clerical Workers. Inflation for these 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.

Despite the record COLA in 2023, the Senior Citizens League points out that older households have reported very modest spending.

“In 2023 retirees received the highest COLA in 40 years at 8.7%, but nobody is getting rich,” said Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League in a statement. “The reality is that the dollar amount of the COLA increase received is meager at best, with the average monthly retiree benefit only $1,790 in 2023.”