Next Year’s COLA Doesn’t Mean Stop Saving

Social Security’s cost-of-living-adjustment (COLA) for 2024 has been set at 3.2%, and on the face of it, that seems like good news. After all, more is more — right?

But let’s be real: Most people’s monthly Social Security check is modest at best. For a middle-income retiree, benefits typically replace just a third of what they were making during their working years. (Low earners get a higher replacement rate.)

If someone needs to claim early, before full retirement age, they’ll bring in even less. According to the Social Security Office of Chief Actuary, most older adults do take benefits early — and then receive a permanently reduced monthly check.

Between those sparse monthly benefits and modest COLA increases (that is, in years that HAVE increases), it’s best to sock away as much as possible. Financial advisors generally recommend aiming to replace between 70% and 85% of whatever you’re earning when you stop working. That way, you’ll have a shot at maintaining your lifestyle when your income ends, and you begin depending on Social Security and savings.

For more on next year’s COLA, read Money reporter Mary Ellen Cagnassola’s story.

— Jill Cornfield, deputy editor

This year’s COLA (8.7%) was the highest in decades, but that doesn’t mean retirees are rich. According to the Senior Citizens League, the average monthly retiree benefit in 2023 is still just $1,790.

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