The annual Cost of Living Adjustment (COLA) increase is just one of the factors that affects the amount of money that you receive monthly through Social Security.
Other factors such as the average income during the work period, the average income of the spouse and the age of the person at the time of requesting the funds also affect the amount of retirement payments.
As a base element, Benefits are calculated based on the worker’s 35 years of highest wages.
Social Security benefits are generally calculated using “indexed average monthly earnings.”. “This average summarizes up to 35 years of a worker’s indexed income. We apply a formula to this average to calculate the primary insurance amount (PIA). The PIA is the basis of the benefits paid to an individual,” explains the Social Security Administration (SSA) on its website.
The formula under which the PIA is calculated reflects changes in overall wage levels, as measured by the national average wage index.
“When we calculate an insured worker’s benefit, we first adjust or “index” his or her earnings to reflect the change in overall wage levels that occurred during the worker’s years of employment. This indexation ensures that a worker’s future benefits reflect the overall increase in living standards that occurred during his or her working life.”, adds the website.
The benefit each American receives will also depend on the age he or she was at the time of applying for retirement funds.
The age at which you start collecting Social Security checks
If you start receiving checks at age 62, the minimum retirement age, monthly payments will be less than if you wait until your full retirement age, which is 66 years old but gradually rises to 67 for people born in 1960 or later. If you wait until age 70 to start receiving transfers, you will receive the maximum monthly amount.
An AARP article adds that marital status or whether the person is married or not can also be a factor in the amount of the check they receive. “For example, if you divorced after 10 years of marriage, you may be able to base your Social Security payments on your ex-spouse’s wages,” they note.
Payments depending on the type of beneficiary
In that sense, Family composition is a key point when determining the amount of Social Security checks.
For example, a surviving spouse (widow or widower) with two children will not earn the same as a retired worker.
Here you can see the table of monthly Social Security payment estimates starting in 2024 depending on the beneficiary group
First checks with 3.2% COLA will be sent on December 29
The first checks with the 3.2% COLA (Cost of Living Adjustment) increase will be sent by SSA on December 29. That first batch will correspond to the beneficiaries of the Supplemental Security Income (SSI) program.
For the more than 66 million Social Security retirees, the first check will begin to be transferred to their accounts or debit cards in January.
“The 3.2 percent Cost of Living Adjustment (COLA) will begin with benefits payable to more than 66 million Social Security beneficiaries in January 2024. The increase in payments to approximately 7.5 million SSI beneficiaries will begin on December 29, 2023. (Explanatory note: some people receive both Social Security and SSI benefits),” the SSA specifies in another entry on COLA on their website.
On average, the new adjustment will translate into an additional $50 per month per check for the beneficiaries.
The group of Social Security beneficiaries with the largest check in 2024 under new COLA
January 10, the date on which the majority of Social Security retirees will begin to receive checks with a COLA increase