As inflation begins to drop, Social Security beneficiaries will likely receive a reduced cost-of-living adjustment (COLA) in 2024.
Social Security Benefits face the biggest COLA IN 2023 (Source: Getty Images)
Cooling Inflation in America
The dropping inflation rate in the United States is great news for American consumers, but it may result in a considerably less cost-of-living adjustment (COLA) for Social Security beneficiaries next year – perhaps as low as 2% or less, according to Yahoo Finance.
Many retired workers were hit hard by inflation last year, as Social Security benefits lost their purchasing power. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased by 8.5% in 2022, considerably exceeding the 5.9% COLA paid to Social Security, according to The Motley Fool.
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Biggest COLA in 2023 by far
In 2021 and 2022, Social Security benefits did not keep pace with inflation. However, Social Security beneficiaries have finally gotten a break. Benefits climbed 8.7% in 2023, the biggest COLA since 1982 and the fourth-largest COLA in history, while inflation has cooled this year.
As inflation begins to fall, Social Security payments begin to restore some of the purchasing power that they have lost due to inflation. However, cooling inflation would also cause a smaller COLA in 2024.
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