Annual Social Security Cost-of-Living Adjustment

What you need to know

fyi50+:  There has been much written about Social Security these days. However, one essential feature of Social Security makes it different from most other retirement income sources. I asked Dave Freitag to highlight this difference and help us understand why it is so important. 

Dave Freitag: The one key feature that makes Social Security different is the automatic yearly Cost-of-Living Adjustment, COLA.

fyi50+: What are the details about these COLA adjustments?

Freitag: We are in a critical part of the year with the Cost-of-Living Adjustments. July, August, and September are crucial months for COLA increases. The amount of the increase for next year, 2024, is based on the Consumer Price Index (CPI). The CPI-W data is recorded during July, August, and September 2023. The COLA increases during these three months have been very high for the past two years, which resulted in a 5.9% adjustment in 2022 and a giant 8.7% adjustment this year. The increase of 14.6 percentage points over the past two years was applied to anyone receiving benefits or to anyone age 62 and older who is not receiving benefits. For more details, see Your Retirement Benefit: How It’s Figured at

The 8.7% adjustment in 2023 was significant because the monthly costs associated with Medicare decreased compared to 2022. Workers collecting checks this year realized the full benefit of the COLA adjustment. 

fyi50+: What size COLA Adjustment increases might we be looking for in 2024?

Freitag: The July and August COLA increases are in the books, but we have yet to learn about September. The Federal Reserve continues applying the brakes to the national economy by incrementally increasing interest rates. These rate increases have been cooling the inflationary cycle compared to this time last year. It is improbable that we will see another rate adjustment in the 5.9% or 8.7% range for 2024. We should know the answer in late October or early November about the COLA increases for next year.  

However, the ballpark estimate might be in the +/-3% range. This increase is much more in line with the historical COLA year-over-year increases from the past. 

From a planning perspective for workers in their 60s or later, assuming between 2% and 3% for projected increases to Social Security in retirement would be safe. 

For younger workers in their 40s and 50s, it would be best to use a lower factor when projecting these increases. It is better to underestimate the benefits and be surprised when they are higher than overestimate the increases and be disappointed if they are lower.

What is critical to remember is that Social Security is one of the few retirement income sources with a built-in hedge against inflation. The COLA Adjustment increases need to be in better sync with the cost-of-living increase, but it is far better than most pension plans and other sources of predictable income in retirement.


David Freitag

David Freitag, an industry veteran in financial services and wealth management, brings a deep passion and unparalleled knowledge of Social Security filing strategies and retirement income planning to his current role as a financial planning consultant for the Advanced Concepts Design Group of Massachusetts Mutual Life Insurance Company (MassMutual). His also holds a Master of Education and Bachelor of Science degrees from the University of Maryland.

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