Many of you felt somewhat vindicated with last year’s Social Security COLA of 8.7%. This recent article from the experts at Center for Retirement Research at Boston College gives us some hope on what to expect for the coming year.
Quoting from the article, “The only option is to make some assumptions.
“As a starting point, Table 1 shows what the COLA for 2024 would be if the CPI-W remained at its June level for the next three months—a very unlikely event. More reasonable options have the CPI-W increasing by an average of 0.2 percentage points, 0.4 percentage points, and 0.6 percentage points, respectively, in July, August, and September.
“This exercise suggests a 2024 COLA between 3.0 percent and 3.8 percent. For now, I’m going with 3.4 percent. The range of estimates is in line with the 3.3 percent COLA projected by the Social Security actuaries in the 2023 Trustees Report and well below last year’s COLA of 8.7 percent.
“My best guess is the 2024 COLA will be roughly in line with 2024 inflation. In contrast, the COLA over the last two years has been out of sync with actual inflation: too low a COLA in 2021 and too high a COLA in 2022. This pattern is the inevitable result of a backward-looking calculation. But it makes perfect sense to base the COLA on actual data rather than a forecast, which could involve constant corrections for over- or under-predicting. And most importantly, over the whole inflation cycle, retirees have received the appropriate increase.”
So, bottom line, not as high as I’m sure many of you would like to see.
If you’re unable to retrieve this article let us know and we’ll send you a copy.
