Social Security beneficiaries may get a much lower cost-of-living adjustment in 2024 as inflation subsides.
But with two months before the COLA for next year is officially announced, there’s one unusual factor that may push the adjustment higher: hurricanes.
The Social Security COLA for 2024 may be 3%, The Senior Citizens League, a nonpartisan senior group, estimates based on the latest government consumer price index data.
The consumer price index rose 3.2% from a year ago, according to the latest numbers for July that were released this month.
Meanwhile, the subset of that index used by the Social Security Administration to calculate the annual COLA, known as the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), was up 2.6% over the previous 12 months.
How hurricane season may influence COLA figures
Much of the disparity between the indexes is due to the heavier weighting of oil and gas prices in the CPI-W, according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
Those prices are a key factor to watch in new CPI data to be released in September and October that will affect the final benefit adjustment for 2024.
“The COLA estimate will go up if the price of gasoline jumps considerably,” Johnson said. “The COLA estimate might go down if gas and oil prices drop.”
Hurricanes, in particular, may prompt higher oil and gas prices, she said.
This year’s hurricane season, which lasts from June 1 to Nov. 30, has a 60% chance of being “above normal” due to record high ocean temperatures, according to the National Oceanic and Atmospheric Administration.
“Certainly, hurricane season bears close monitoring, and we are entering the heart of it now,” said AAA spokesman Andrew Gross.
“A major storm impacting the Gulf Coast and nearby refineries will likely lead to a spike in gas prices for a few weeks,” he said.
However, the pressure may be off pump prices at the moment, he said, due to a combination of lower oil prices and flat demand. The national average for a gallon of gas was $3.87 as of Friday, according to AAA.
Seniors still struggling with high inflation
Even if the Social Security COLA rises above the 3% estimate for 2024, it still most likely will not come close to the record 8.7% boost to benefits beneficiaries saw this year.
That may be tough for people age 62 and up who are still grappling with higher costs due to inflation, Johnson said.
“Economists are saying inflation is moderating and things are getting better, but consumers are still faced with high prices,” Johnson said.
Housing, food and health-care costs represent about 80% of the typical seniors’ budget, she said.
Some of those costs don’t typically tend to go back down, particularly with regard to housing, Medicare and health-care costs, Johnson noted.