The Social Security Administration has announced that Social Security checks will change again before the end of the year. Every day we move closer to the final number that will affect Social Security and its beneficiaries. Next month, you can say goodbye to any expectations about the COLA (Cost-of-Living Adjustment), but for now, it's wise to take a closer look at how things are progressing and prepare your pocketbook for either good or bad news. Read on to find out more.

Social Security is a set of programs designed to help Americans avoid poverty and meet their basic needs during unexpected or unavoidable situations. To achieve this, the amount of money each program provides must be adequate to cover essential bills. However, the economy is dynamic; it changes daily. An adjustment is necessary to maintain the purchasing power of beneficiaries. This is achieved through an index commonly known as the COLA. Adjustments are made annually to reflect changes in the economy and to prepare for future events.

The COLA is calculated in October using the average of the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) for July, August, and September of the previous year. This figure is then compared to the same calculation from the prior year to determine the COLA. Once calculated, Social Security uses the COLA to adjust the amount each beneficiary receives, income limits for program eligibility, and credit values based on Social Security tax contributions.

The impact of the COLA is extensive and complex. Since the definitive value for the COLA is still pending, you can take a conservative approach by estimating your monthly benefits adjusted by current COLA projections. The latest COLA projections from the Senior Citizens League (TSCL) indicate an increase from 2.57% to 2.63%. This news can be seen as both good and bad. It is good because beneficiaries will see a nominal increase, meaning they will receive more money next year. However, COLA is tied to inflation, so an increase in inflation may reduce purchasing power.

Therefore, even with a higher check, you might be able to purchase less. It's important to note that while this provides a reasonable estimate, the exact effect of the COLA can vary. We will show different outcomes based on the various programs that Social Security administers and specific amounts for July 2024.