July 2024 Brings a 3.2% Increase to Social Security Benefits

Arnia
4 Min Read

When an American citizen stops working and starts collecting Social Security benefits, the amount they get depends on their work history. Once these payments begin, there’s no way to extend how long they last. But there’s a way to increase these payments called the Cost-of-Living Adjustment (COLA). Even though people can’t control COLA, they can plan for its effect on their monthly budget.

What is COLA?

COLA Explained

The Cost-of-Living Adjustment, or COLA, is a key factor in raising Social Security payments. It ensures that the buying power of Social Security benefits keeps up with inflation, which is the increase in prices over time. Each year, the Social Security Administration (SSA) calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If the CPI-W goes up, Social Security benefits are adjusted to match.

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July 2024 Payment Increase

In July 2024, people receiving Social Security benefits will see a 3.2% increase in their payments compared to the previous year. This increase is because of the COLA adjustment, which reflects the higher cost of living. The highest Social Security payment in 2024 is $4,873, but this is only for those who wait until age 70 to retire. Not everyone can wait that long, but those who do get larger checks.

Who Gets the Increase?

Eligibility

The increase on July 3rd is specifically for Group 1 retirees. These are people who have been receiving Social Security benefits since before May 1997. There are no extra requirements, making the increased payment simple for eligible recipients. The payment amount varies, but everyone in this group will see their checks go up.

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Which Benefits are Affected?

Types of Benefits Affected

Both Disability and age-related Social Security payments will get the COLA increase. This means that eligible beneficiaries, no matter what type of benefit they receive, will see their adjusted checks in July. This uniform increase helps all beneficiaries better manage their monthly expenses.

Planning Your Finances

Financial Planning

Knowing how COLA affects Social Security payments is important for planning your finances. Beneficiaries should keep an eye on COLA announcements to anticipate changes in their benefits. This helps with budgeting and planning for future expenses.

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The COLA adjustment is a valuable tool for maintaining the purchasing power of Social Security benefits. By understanding and anticipating these changes, beneficiaries can better manage their finances and ensure they meet their needs.

What is COLA?

COLA stands for Cost-of-Living Adjustment. It increases Social Security payments to keep up with inflation.

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How is COLA calculated?

COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Who gets the COLA increase in July 2024?

Group 1 retirees, who have been receiving benefits since before May 1997, will get the increase.

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Will all types of Social Security benefits get the COLA increase?

Yes, both Disability and age-related benefits will receive the COLA increase.

How can knowing about COLA help with financial planning?

Knowing about COLA helps beneficiaries plan their budget and anticipate changes in their benefits.

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By Arnia
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A Certified Public Accountant specializing in personal finance and taxation. Arnia engaging writing style and deep understanding of tax codes make her articles a must-read for individuals seeking to maximize their tax savings.
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