In the current year, Social Security benefits received the largest cost-of-living adjustment in many years, but retirees are likely to receive a considerably smaller increase in 2024.
Inflation hit the U.S. economy hard in 2022, as increasing prices for fuel, food, and monthly expenses put many people in a terrible financial situation.
However, since the 5.9% cost-of-living adjustment (COLA) provided to payments in the past year failed to keep up with inflation, retired people receiving Social Security were hit particularly hard. In simple terms, in 2022, Social Security recipients had less purchasing power.
Thankfully, the system can course correct, and it successfully did so. In 2023, Social Security benefits received a historic 8.7% COLA, the highest increase for retirees in over 40 years. A lifesaver, that increased revenue has the potential to recover any purchasing power that benefits may have lost the previous year. However, it also carries some negative news.