According to The Senior Citizens League, Social Security recipients could potentially receive a 3% raise next year. This estimate has increased from the previously projected 2.7% from last month. The official announcement regarding the cost-of-living adjustment (COLA) for next year will be made in October by the Social Security Administration. This decision will be based on a comparison of the average consumer price index from the third quarter of 2023 with the average data from the same period in the previous year. Until then, The Senior Citizens League, an impartial advocacy organization, provides its own projection based on the latest inflation data.
Inflation Data Reveals Slower Pace of Price Increases
Recent inflation data released by the U.S. Bureau of Labor Statistics on Wednesday indicates a slowdown in the rate of price increases for June. Prices rose by 3% over the same period last year, as measured by the CPI-U index. However, the COLA calculation is based on a subset of this index known as the consumer price index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W rose by 2.3% over the past 12 months.
Gasoline Prices Influence COLA Estimate
Fluctuations Expected in COLA Estimate
Given the volatility of inflation over the past year, Johnson anticipates a possible dip in the COLA estimate for next month. As circumstances continue to change, the COLA estimate will fluctuate accordingly.
The 2024 COLA Estimate and its Impact on Retirement Benefits
The Committee for a Responsible Federal Budget recently released its own estimate for the 2024 cost-of-living adjustment (COLA), ranging between 2.6% to 3.3%. This estimate takes into account different inflation scenarios, with the top end assuming continued inflation trends and the bottom end assuming no net inflation for the rest of the year.
Should the COLA be 3%, the average monthly retirement benefit of $1,787 would see an increase of approximately $53.60, according to The Senior Citizens League. However, it’s important to note that beneficiaries will not necessarily pocket the full amount of this increase due to automatic deductions for Medicare Part B premiums from Social Security checks.
The Centers for Medicare and Medicaid Services have yet to announce the Part B premium for 2024. In their March annual report, the Medicare trustees projected that the standard premium would rise to $174.80 per month, up from $164.90 this year. However, this estimate does not include the potential impact of lecanemab, a new Alzheimer’s drug that Medicare plans to cover once it receives full approval from the Food and Drug Administration.
Lecanemab is administered intravenously in the doctor’s office, making it fall under Medicare Part B coverage. Patients on this drug require regular monitoring for side effects. Taking into account spending estimates, The Senior Citizens League predicts that the addition of the Alzheimer’s drug and the related Part B services for administration and monitoring could raise the Part B premium by approximately $5 per month, potentially bringing it up to around $179.80 per month.
It remains to be seen how these figures will evolve, but they highlight the intricate considerations involved in determining retirement benefits and Medicare premiums. As we navigate the complexities of these financial matters, it is important for individuals to stay informed and prepared.