Calls have already started coming in asking what the cost-of-living increase is going to be for 2024. When do I get the increase? There are news articles already making announcements of the current CPI, which is the CPI-U. This is the Consumer Price Index for All Urban Consumers. The CPI-U is used in federal legislation, such as the indexation of federal income tax brackets. Whereas the COLA increase for Social Security is based on the CPI-W. Consumer Price Index for Urban Wage Earners and Clerical Workers.
The CPI-U is currently 3.2 percent, whereas the CPI-W at this point is 2.6 percent. This is based on comparing July 2022 to July 2023. The COLA is based on the average growth of inflation between July, August, and September of the prior year. This means the current CPI-W of 2.6 percent can go up or down when the average of those three months is determined. The COLA is announced around the middle of October and will be applied to your December 2023 Social Security payment that you will receive in January 2024. (There is not always a cost-of-living increase as was the case in 2010, 2011 and 2016.)
Due to the declining inflation rate most economists are predicting a 2024 COLA increase between 2.7 percent and 3 percent. Whatever the COLA increase ends up being, you also need to take the cost of Medicare Part B into consideration. The Medicare Trustees forecast Medicare Part B will increase in 2024, but by how much has not yet been determined.
The COLA increase will be announced around Oct.13, and the cost of Medicare Part B toward the middle of November 2023. Therefore, it will be a couple more months before the actual COLA increase will be known, than almost another month to find out how much the cost of Medicare Part B will increase. You will receive the full COLA, but it will be reduced by any increase to Medicare Part B.