Estimate for 2024 Social Security COLA drops with inflation

With the consumer price data for May showing inflation falling to its lowest point since March 2021, the Senior Citizens League estimates that Social Security's cost-of-living adjustment for 2024 could drop to 2.7%. 

The consumer price index for urban wage earners and clerical workers, known as the CPI-W, the index that's used to determine the COLA, rose 3.6% year over year in May, according to a report released Tuesday by the Bureau of Labor Statistics. That's the lowest level since March 2021, when the CPI-W rose 3%.

Last October, the Social Security Administration announced that it would increase retirement benefits by 8.7% for 2023, the largest cost-of-living adjustment in 42 years.

As for the topline numbers, the consumer price index for all urban consumers rose 0.1% in May on a seasonally adjusted basis, after increasing 0.4% in April, the Bureau of Labor Statistics said, and was up 4.0% over the last 12 months, before seasonal adjustment.

Despite the decrease in the rate of inflation, an ongoing survey through June 6 by the Senior Citizens League shows older consumers are reporting little improvement in their household spending. The survey of 2,275 respondents showed 62% of survey participants reported food costs as their fastest-growing cost, while housing costs are the biggest concern for 22%.

“Since January of this year, the actual inflation rate, as measured by the CPI-W, was lower than the amount older Americans received in their 8.7% COLAs," Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, said in a statement. "That difference theoretically should provide a modest temporary improvement in buying power of roughly $52 per month for a retiree with average benefits of $1,694.”