Seniors still feeling the pinch from high prices will likely see their monthly Social Security benefit increase by more than $57 next year.
The Senior Citizens League (SCL) estimates Social Security’s cost-of-living adjustment, or COLA, will be 3.2% next year, raising the average monthly retiree benefit of $1,790 by $57.30 starting in January 2024. The estimate is based on the latest inflation data released Wednesday.
That’s far below the 8.7% increase in benefits received this year, but higher than the average over the past 20 years — which was 2.6% — and up from the 3% hike that was crystal balled last month.
And it would still be welcome news for the more than 70 million retired senior citizens and disabled workers who continue to be crushed by sharp prices, such as those seen in housing and healthcare, according to the nonpartisan group.
"I’m so tired of saying it, but inflation is not through with us yet," Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, told Yahoo Finance.
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The estimate is based on inflation data from the Bureau of Labor Statistics that showed consumer prices rose 3.7% in August over the prior year, a jump from July's 3.2% annual increase. But that still is a relief from last year’s steep inflation.
The actual COLA, which the Social Security Administration is expected to announce in mid-October, is calculated by averaging together the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year — July, August, and September of 2023 — and then comparing that figure with the same data from last year.
The CPI-W increased 3.4% over the last 12 months, slightly higher than the headline inflation figure. For the month, the index increased 0.6% prior to seasonal adjustment.
It’s unlikely, though not impossible, that September’s inflation reading would push the COLA higher to 3.3% or more.
"There’s only been two other times in the past 23 years when the August to September inflation rate of change was high enough to make that jump," Johnson said. "Everyone can start placing their bets."
Another big impact on rising costs for retirees’ budget next year will be when Medicare premiums for 2024 are released — typically in November, Johnson added. The Social Security Administration automatically deducts Medicare Part B premiums from Social Security benefits before the benefits are received.
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A, which covers inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery, and home health care.
One pricey new cost could be Medicare’s coverage for a new Alzheimer’s drug — lecanemab, known by the brand name Leqembi, which is expected to cost $26,000 per year without insurance.
Based on Medicare Part B spending estimates, "our forecast for that the drug and related Part B services required to administer and monitor the patient for dangerous side effects would add about $5 per month to the Part B premium for everyone, potentially raising the 2024 premium to about $179.80 per month," Johnson said.
Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on Twitter @kerryhannon.
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