What is this year’s Social Security cost of living increase?

Social security benefits typically increase year-over-year to keep up with the cost of living. The 2024 Social Security cost-of-living adjustment (COLA) will be 3.2%, according to the Social Security Administration (SSA).

How has the cost of living adjustments changed over time?

The SSA’s Cost-of-Living Adjustments were relatively high from 1975 to 1982, and again in 2021 and 2022. Between 1975 and 2023 (the period for which the SSA has COLA data) there were only three years that had no adjustment: 2009, 2010, and 2015. The highest-ever adjustment was in 1980, at 14.3%.

How is the Social Security COLA calculated?

The COLA changes with inflation. Specifically, it’s pegged to the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which looks at changes in price that workers in urban areas pay for a range of consumer goods and services (e.g., apples, clothing, plane tickets).

The SSA calculates its cost-of-living adjustments based on the CPI-W increase from the third quarter of one year to the next. If CPI-W increases, the COLA equals the percent that CPI-W increased. If CPI-W doesn’t increase, there is no adjustment.

CPI-W over time

The Consumer Price Index is one way the US government measures inflation. The largest CPI increases were in the late 1970s and early 1980s, when the annual change in CPI reached a high of 13.5%. Inflation remained relatively steady from 1983 to 2020, averaging 2.7% per year and only exceeding 5% in one year, 1990. Inflation then rose quickly in 2021 and 2022.

The CPI-U measures expenditures for all urban consumers, regardless of employment status. The CPI-W is a subcategory of the CPI-U and measures the expenditures of urban wage earners and clerical workers, specifically.

How many Americans will benefit from the COLA?

More than 66.8 million Americans will receive larger payments as a result of the 3.2% cost-of-living adjustment in 2024. That includes approximately 7.5 million people who will benefit from increased Supplemental Security Income (SSI) payments. (Some people receive both.)

How is the COLA applied to Social Security and Disability Insurance benefits?

Cost of living adjustments are automatically applied to benefits paid out through Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) programs. Beneficiaries receive adjusted payments beginning in January of each year following an adjustment.

The average monthly Social Security benefit in 2023 was $1,707.

Social Security beneficiaries over time

As America’s population ages, the number of people getting Social Security retirement benefits has increased. In September 2023, 66.8 million Americans received benefits (58.2 million through OASI and 5.8 through DI), up from 46.7 million in September 2013.

The Social Security Administration’s cost of living adjustment also applies to the Supplemental Security Income (SSI) program, which provides payments to people with disabilities and older people with little or no other source of income.

2023/2024 SSI benefit changes

In 2024, the federal maximum for SSI for eligible individuals will increase to $11,321.49 for the year, $16,980.36 for eligible couples, and $5,673.30 for anyone who qualifies as an “essential person.”

*Essential person qualifications

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