The Social Security Administration (SSA) is slated later this month to make its announcement on the cost-of-living adjustment (COLA) for tens of millions of retired Americans.

The U.S. Bureau of Labor Statistics (BLS) in its October calendar schedules to release September's Consumer Price Index (CPI) data on Oct. 12, while the SSA is likely to announce next year's COLA that same day. Last year, the SSA's announcement was given on Oct. 13 after the BLS released last September's inflation figure.

There had been speculation that a government shutdown would push the agency's COLA announcement to a later date. However, the shutdown was averted at the last minute over the past weekend as Congress was able to pass a spending deal to fund the temporarily fund the government.

Approximately 70 million Social Security retirees and those who get Supplemental Security Income (SSI) will see their payments impacted by the COLA report. The percentage will apply to most payments starting from December 2023.

The COLA is determined by the annual change at the end of each year's third quarter in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), published each October by the BLS.

The Senior Citizens League nonprofit estimates this year's COLA to be 3.2 percent, based on recent inflation numbers, according to a September news release from the group. That would average out to about a $57 increase in extra benefits, raising them to about $1,790 for the average recipient, it estimated.

In August, the league had predicted that, based on inflation, the COLA would be 3 percent. That came before the Department of Labor released its August inflation numbers.

Last year, with annual inflation raging near the highest in four decades, the COLA announced for 2023 payments was 8.7 percent, the largest increase since 1981 and the fourth-largest in U.S. history. Price increases have slowed sharply this year in the face of stiff interest-rate increases by the U.S. Federal Reserve.

Another larger-than-average COLA increase may be in the cards this year. While inflation has slowed from its peak rate in the summer of 2022, it remains above the rate that prevailed over the 10 years prior to the pandemic. The COLA has averaged 2.8 percent since 1984, but it averaged just 1.4 percent from 2010 through 2019 and in three of those 10 years no increase was given at all.

In August, the CPI was up 3.4 percent year over year and had ticked up since June, with some analysts saying that's due to higher gasoline prices. Still, whatever COLA is announced for 2024 is unlikely to offer the same buffer over inflation as recipients enjoyed in 2023.

Mary Johnson, with the Senior Citizens League, told USA Today last month despite the decades-high COLA for 2023, retirees haven’t been able to recover the losses incurred by recent high inflation. In mid-2022, the CPI hit 40-year highs in the wake of multiple trillion-dollar spending packages, supply-chain issues, exceptionally high gas prices, and the aftermath of pandemic-related chaos.

Inflation Pressures

Because inflation has remained relatively high compared with much of the 2000s, it may continue to pose problems for seniors on a fixed income.

“Inflation was so severe in 2021 and 2022 that the average Social Security benefit fell behind by $1,054, leaving 53 percent of retirees doubting they will recover because household costs rose more than the dollar amount of their COLAs,” Ms. Johnson told USA Today.

Some Social Security recipients, she added, have different situations. “There are the planners who put money aside, maybe worked for companies that had pensions,” she said, Newsweek reported. “They may have a 401(k) or worked in the military and had retiree benefits. And then there’s the other side.”

Ms. Johnson said that some Social Security recipients may also have to pay taxes---due to last year's COLA of 8.7 percent. About 23 percent of recipients paid taxes on at least a part of their benefits for the first time during the past tax season, she said, citing a survey.

“We expect the number who pay tax on a portion of their Social Security benefits to jump even more as next year’s tax season reflects the 8.7 percent COLA increase in 2023,” she told USA Today.

Overpayments?

Meanwhile, there has been a rash of recent reports indicating that the SSA has sent letters demanding that some Social Security or SSI recipients pay the agency back due to overpayments. Some of the letters in some cases, according to the reports, demanded tens of thousands of dollars in back payments spanning several years.

A spokesperson for the agency said in a statement last month that it handles overpayments on a case-by-case basis.

"Social Security is required by law to adjust benefits or recover debts when we establish that someone received payments to which they are not entitled and an overpayment occurs. We must maintain our responsibilities to taxpayers to be good stewards of the trust funds," the statement said.

Reuters contributed to this report.