20.6% Raise In Benefits For Social Security, SSI, SSDI & VA: Know Details

The Social Security Administration (SSA) recently announced a 3.2% increase in cost-of-living adjustments (COLA) for 2024, benefiting around 71 million Americans.

While this adjustment adds an average of $50 per month to Social Security benefits, speculation has risen regarding a potential 20.6% raise in benefits, spurred by discussions of backpay.

This article explores the backpay scenario, actual SSA updates, and what beneficiaries should know about potential increases.

Backpay in the USA

In 2023, Social Security beneficiaries saw an 8.7% COLA increase, a sharp rise due to high inflation.

However, with inflation still affecting many Americans, some beneficiaries wonder whether backpay could be introduced to compensate for lower past benefits.

For 2024, the announced 3.2% COLA increase applies to over 66 million Social Security recipients and 7.5 million Supplemental Security Income (SSI) recipients, starting in January 2024 and December 2023, respectively.

In addition, the maximum earnings subject to Social Security tax will increase from $160,200 to $168,600 in 2024.

What is the 20.6% Raise to Social Security, SSI, SSDI, and VA Benefits?

There has been talk among some groups of a potential 20.6% increase in benefits, based on hypothetical backpay calculations. The reasoning goes as follows:

• If the 2023 COLA had been calculated at 17.4% (instead of 8.7%) and combined with the 3.2% COLA increase in 2024, it would result in a total increase of 20.6%.
• Some believe that the government could offer backpay by increasing benefits retroactively to account for a larger COLA adjustment.

However, no official announcement has been made by the SSA or the U.S. government regarding such a significant backpay increase.

The 20.6% raise remains a hypothetical scenario, and no indications suggest that the SSA will increase benefits by more than the already announced 3.2%.

Updates on Backpay

As of now, the 20.6% backpay scenario is purely speculative. The SSA calculates COLA based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks inflation rates.

The current COLA increase for 2024 is in line with the data gathered from the third quarter of 2023.

The SSA has not announced any plans to provide additional backpay beyond the 3.2% COLA increase. It is also unlikely, given that the SSA follows a formula dictated by federal law to determine COLA adjustments, leaving little room for retroactive changes.

What is Backpay?

Backpay refers to wages or benefits owed to an employee that were not paid on time. In the context of Social Security, backpay may apply if benefits were delayed due to an error or wrongful termination of benefits.

It does not, however, typically relate to general COLA increases or hypothetical adjustments for inflation.

To claim backpay in such cases, beneficiaries must meet specific criteria and file a claim within a certain window. The amount owed is calculated based on official guidelines, and any such backpay is handled on a case-by-case basis.

2024 COLA Adjustments and Inflation

The 3.2% COLA increase for 2024 is based on CPI-W data from the third quarter of 2022 and 2023. The average CPI-W for 2022 was 291.901, and for 2023, it was 301.236.

Since the CPI-W increased by 3.2% year over year, the SSA applied this rate to adjust benefits for inflation.

While the 2023 COLA increase of 8.7% was larger due to a spike in inflation, inflation rates have stabilized somewhat, resulting in a lower adjustment for 2024. For recipients, this means a smaller monthly increase compared to 2023, but still a boost to reflect current economic conditions.

How Much Will Benefits Increase in 2024?

The 3.2% COLA increase will raise monthly benefits for SSI, SSDI, Social Security, and VA beneficiaries as follows:

• Social Security recipients: Expect an average monthly increase of around $50.
• SSI recipients: Will see increases in payments beginning in December 2023.
• SSDI and VA beneficiaries: Will also see adjustments in line with the 3.2% increase starting in January 2024.

Although some had hoped for a larger increase, the current economic data does not support a more substantial COLA adjustment. Therefore, any potential increases beyond the 3.2% are unlikely unless inflation surges again in the future.

What’s Next?

For now, the 3.2% increase is set to take effect in 2024, with no further announcements about a hypothetical 20.6% backpay raise. Beneficiaries should monitor official SSA communications for any updates or changes. For now, the following points are essential:

• No backpay announcements: The SSA has not confirmed any backpay beyond regular COLA adjustments.
• COLA increase based on CPI-W: COLA increases are calculated using federal guidelines based on inflation data from the CPI-W.
• Regular updates: Stay informed through the SSA official website and government portals for any changes to benefit rates.

While discussions of a 20.6% raise to Social Security, SSI, SSDI, and VA benefits have gained traction, they remain speculative. The SSA’s official COLA increase for 2024 is 3.2%, reflecting current economic conditions.

Beneficiaries should continue to monitor SSA announcements and rely on official sources for the most accurate information regarding benefit payments.

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