After a record-breaking hike of 8.7% in 2023 to deal with inflation and the after- effects of across-the-board cost-of-living increases during COVID-19 pandemic, the Social Security Administration announced a marginal increase in 2024 for more than 71 million Americans.

According to the Biden administration, Social Security and Supplemental Secu- rity Income (SSI) benefits will increase 3.2% in 2024. That means, on average, Social Security retirement benefits will increase by more than $50 per month starting in January.

More than 66 million Social Security beneficiaries will see the 3.2% cost-of-living adjustment (COLA) beginning in January 2024. Increased payments to approxi- mately 7.5 million people receiving SSI will begin on December 29, 2023.

“Social Security and SSI benefits will increase in 2024, and this will help millions of people keep up with expenses,” said Kilolo Kijakazi, acting Commissioner of Social Security.

Despite the record Social Security increase in 2023, it was not high enough to cover the highest inflation levels seen since 1981, hitting 9.1% in June 2022 in the wake of the COVID-19 pandemic. The Federal Reserve, which is tasked with setting U.S. monetary policy to maintain maximum employment and a robust economy, has defined stable prices as an inflation rate of 2% since 2012.

In its effort to tame inflation, the Fed’s Open Market Committee has raised benchmark U.S. interest rates eleven times since March 2022 from zero percent to a range of 5.25%-$5.50. At its last quarterly meeting in September, the FOMC put its aggressive monetary policy on hold with plans to revisit the issue again at Fed retreats in November and early 2024. Some economists, U.S. policymakers, and leading business leaders have urged the FOMC to begin lowering interest out of concern that further hikes could damage the housing market and the U.S. economy.

The Social Security Act provides for how the yearly COLA is calculated. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as determined by the Department of Labor’s Bureau of Labor Statistics, which also calculates inflation.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax will increase to $168,600 from $160,200.

Social Security officials said they will begin notifying people about their new benefit amount by mail starting in early December. To learn more about Social Security and Medicaid benefits visit www.ssa.gov/cola.