(NewsNation) – The Social Security Administration announced 2024’s cost-of-living adjustment (COLA) just over a month ago, confirming a 3.2% bump in benefits for retirees. Here’s what you need to know.

How does the 2024 increase compare to 2023’s?

While still one of the largest increases in decades, 2024’s COLA increase of 3.2% is far below the 8.7% bump that recipients were granted in 2023.

When will the COLA increase take effect?

Checks sent in January will reflect the updated allowance.

What is the purpose of COLA increases?

The Social Security Administration’s annual cost-of-living adjustments are designed to help Social Security and Supplemental Security Income (SSI) recipients retain their buying power amid rising inflation. These increases, which are issued annually, are determined using the Bureau of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which itself is a measure of the change in prices for common consumer goods and services.

Which dates will the increased checks go out?

Social Security checks are sent out based on the birthdate of the recipient: checks will be sent on the 8th of the month for those with birthdays between the 1st and 10th; on the 15th for those born between the 11th and 20th; and on the 22nd for those born between the 21st and 31st.

Checks for Supplemental Security Income (SSI) recipients are generally sent on the 1st, while those who began getting payments prior to May 1997 get theirs issued on the 3rd.

Will taxes increase?

Social Security and Medicare are funded by a payroll tax known as the Federal Insurance Contributions Act. Maximum earnings subject to FICA will increase from $160,200 in 2023 to $168,600, meaning that the incomes of some higher-earning Americans will be subject to more taxes.