Inflation led to the highest cost-of-living adjustment in 40 years for Social Security beneficiaries this year, with checks increasing 8.7%. But with inflation cooling, the COLA could be less than half of that next year.
Though it’s still too soon to know exactly what the 2024 adjustment will be—it is based on inflation numbers from July, August, and September of the preceding year and will be announced in October—current projections put it around 3.1%. But it could be even less generous, says Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.
“Since there are still five more months of data to come in, my estimate will change,” Johnson tells Fortune. “The long-term inflation is still downward. Thus, the COLA could go lower than 3.1%.”
The COLA affects some 70 million people who receive Social Security benefits, including seniors, disabled adults, survivors of insured workers, and low-income individuals who receive Supplemental Security Income (SSI).
Due to rapidly rising inflation over the past few years, those 70 million beneficiaries received larger than normal adjustments in 2022, when the increase was 5.9%, and in 2023, with the four-decade high of 8.7%. Even if the adjustment hit 3.1% next year, that would still be higher than many years over the past decade (in 2021, the COLA was 1.3%; in 2020, it was 1.6%).
Inflation and a rocky stock market have hit seniors—including both baby boomers and members of the Silent Generation—especially hard over the past few years. Some have had to make hard choices about what to pay for as their budgets are stretched thin; others have delayed retirement or gone back to work to make ends meet.
But even though inflation may be moderating, it’s still higher than it has been in 20 years. And the Senior Citizens League (SCL) points out that many people on fixed incomes, especially seniors, have actually lost buying power over the past two decades. The longer someone has received benefits, the more their purchasing power has fallen, as the losses compound each year. The organization also found that those who retired before 2000 have lost 36% of their buying power.
Per the organization, Social Security benefits have increased by 78% between January 2000 and February 2023, while the cost of goods and services retirees typically buy—including food, utilities, car maintenance, and so on—has increased by 141.4%.
“For every $100 a retired household spent on groceries in 2000, that household can only buy about $64 worth today,” according to the SCL.