Social Security Benefits Got a Big COLA in 2023, but Retirees Should Expect a Smaller Raise in 2024
Many retired workers found themselves in a financial pinch last year as Social Security benefits lost purchasing power to inflation. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) soared 8.5% in 2022, easily outpacing the 5.9% cost-of-living adjustment (COLA) that was applied to Social Security.
That shortfall added momentum to a problem that began one year earlier. Social Security benefits failed to keep up with inflation in 2021 as well, as the 5.3% increase in the CPI-W topped the 1.3% COLA. In total, the average retired worker benefit lost $1,054 in purchasing power in 2021 and 2022 due to the increased cost of groceries, household utilities, and other goods and services.
Fortunately, Social Security beneficiaries finally caught a break. Benefits increased 8.7% in 2023 -- the largest COLA since 1982 and the fourth-largest COLA in history -- and inflation has cooled significantly this year. That means Social Security payments are regaining some of the buying power they lost in prior years. But cooling inflation also portends a smaller COLA in 2024.
Source Fool.com
