Social Security benefits have increased — here's how much more you'll receive

Social Security recipients should notice an increase in their benefits this month, as the annual cost-of-living adjustment (COLA) for 2024 takes effect.

To keep pace with inflation, payments are rising by 3.2%, according to the Social Security Administration, equal to about $55 more on average per month for the nearly 67 million Americans who receive benefits.

It's a more modest increase than the 8.7% COLA seen in 2023, the highest in more than four decades, and represents a cooling of retail prices. Before the pandemic, the last time the COLA was larger than this year was in 2011, when it reached 3.6%.

Below, CNBC Select explains what you need to know about the cost of living adjustment, including how it's calculated and how much more you'll see in your monthly check.

• What is Social Security's COLA?
• How is the cost-of-living adjustment calculated?
• How much more money am I receiving?
• When will I see the COLA increase in my check?
• Bottom line

The cost-of-living adjustment is an annual modification in Social Security benefits intended to account for inflation.

The 2024 Social Security COLA increase is 3.2%. Here are the annual increases for the last five years:

• 2019: 2.8%
• 2020: 1.6%
• 2021: 1.3%
• 2022: 5.9%
• 2023: 8.7%

The COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, which the Bureau of Labor Statistics calculates monthly by looking at the average prices of household goods like food, housing and transportation.

The Social Security COLA for any given year is determined by the CPI-W in the third quarter of the previous year.

The average Social Security check will increase by about $55, from $1,705.79 in 2023 to $1760.37 in 2024.

This shouldn't be considered a bonus, however, but an adjustment to keep benefits in line with rising prices. It's still important to be financially responsible: One place you can put additional money is in a high-yield savings account, which earns more than a traditional savings account. We recommend LendingClub High-Yield Savings Accounts, which have no monthly fees or minimum balance requirements beyond the $100 opening deposit.

The COLA increase takes effect in January 2024. Payments are disbursed by the Social Security Administration based on recipients' birthdays.

• If your birthday is between Jan. 1 and Jan. 10, your payment was sent out Wednesday, Jan. 10.
• If your birthday is between Jan. 11 and Jan. 20, your payment was sent out Wednesday, Jan. 17.
• If your birthday is between Jan. 21 and Jan 31, your payment will be sent out on Wednesday, Jan. 24.

If you received Social Security benefits before May 1997, you should have been paid on Jan. 3, 2024.

While it's not as large as the 2023 adjustment, the 3.2% COLA increase for 2024 will put more money in the pockets of seniors and other Social Security recipients.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.