Social Security Benefits See Largest COLA Increase in 40 Years, But Rising Medicare Costs Cut Into Gains

Social Security's cost-of-living adjustment (COLA) raises benefits to account for inflation based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The 2023 COLA was 8.7%, the largest increase in 41 years, raising the average retiree's benefit by $146 per month.

The 2024 COLA is estimated to be 3.2%, still above the 20-year average of 2.6%. This would raise the average retiree's benefit by about $59 per month.

Higher Medicare Part B premiums in 2024 will likely erase most or all of the COLA increase for some lower-income retirees.

Over the past 20+ years, COLAs have not kept pace with inflation faced by seniors, eroding Social Security's purchasing power by an estimated 36% since 2000.