A Smaller Social Security For 2024 Could Be Good News For The Economy

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A smaller social security would be an indication that the consumers could be under minimal financial strain. Over the last couple of years, the seniors who have been surviving on Social Security have had some reason to celebrate the month of October.

This has usually been the month when the Social Security Administration announces what the COLA or the cost of living adjustment for the upcoming year will be. And the raises that have been present over the last two years have been quite generous. In January 2022, the seniors on Social Security found out that the monthly benefits rose by 5.9%, and in January 2023, the benefits went up by around 8.7%. 

Social Security Payment Could Be Low This Year

However, it is understood that the recipients of Social Security will only see an increase of 3.2% in the benefits. And for many seniors, this could be bad news in the context of the recent COLAs. But on the other hand, a smaller SS COLA could be great news for the broader economy on the whole. For some, the Social Security COLAs are usually tied pretty simply to the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is a subset of the well-known Consumer Price Index. The CPI is also used as a pretty general measure of inflation. 

Interestingly, the main purpose of SS COLAs is to allow the checks that are distributed to the beneficiaries of the program to maintain their relative buying power as inflation usually drives the living costs on an upward trajectory. The reason people on SS enjoyed ultra-high COLAs back in 2022 and 2023 was that inflation was pretty rampant in the years that led up to these raises.