Social Security Cola Increase Moderates to 3.2% For 2024

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Social Security Cola Increase Moderates to 3.2% For 2024

The Social Security Administration announced on Thursday a Cost of Living Adjustment (COLA) increase of 3.2% for 2024, a decrease from the 8.7% hike seen in 2023. This adjustment will result in an average monthly increase of $60 for beneficiaries. Rob Williams of Charles Schwab (NYSE: SCHW ) noted that this moderating inflation could benefit retirees who typically rely on fixed incomes.

Charles Schwab, a prominent player in the Capital Markets industry, has been actively managing its financial health, as demonstrated by its management aggressively buying back shares and consistently increasing earnings per share, according to InvestingPro Tips. The company's market cap stands at 94.02B USD, with a P/E ratio of 14.95 and a revenue growth of 9.57% in the last twelve months (LTM2023.Q2), as reported by InvestingPro data. The company has also maintained dividend payments for 35 consecutive years, a sign of its financial stability.

In addition to the COLA change, the upper earnings limit subject to Social Security tax will see an increase to $168,600 from its current $160,200 due to wage growth. Kathleen Romig from the Center for Budget and Policy Priorities pointed out that Social Security is unique in its adjustment with inflation, unlike private savings or pensions.

Despite these adjustments, there are concerns that higher benefits could push some seniors over income limits for assistance programs such as SNAP, housing, and heating assistance. The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) index. However, there is an ongoing discussion about switching to the CPI-E index, which focuses more on elderly spending patterns.

According to a survey by the Senior Citizens League, older adults are expressing financial pessimism and fears of Social Security cuts. Compounding these worries are expectations of a 6% rise in Medicare Part B costs in 2024, which could outstrip the COLA increase and impact retirees' net income.

Tax liabilities for Social Security beneficiaries have also been affected due to outdated benchmarks. Jo Ann Jenkins, AARP's Chief Executive, voiced concerns about these pressures and called upon Congress to strengthen Social Security as trust funds backing it are projected to run out by 2034.

Investors interested in the financial health and performance of Charles Schwab can find additional insights and tips by subscribing to InvestingPro. The platform offers real-time metrics and tips on a wide range of companies, including Charles Schwab, with 10 additional tips available for this company alone.

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