Railroad Retirement COLA 2024 (Cost of Living Adjustment) is vital for retirees, ensuring their benefits keep pace with inflation. Explore how COLA is calculated and its impact on Railroad Retirement benefits in 2024.
What is the COLA?
Cost of living adjustments was started in 1973 to provide increase to social security and railroad retirement to keep pace with inflation.
How is it calculated?
- Formula Overview: COLAs are determined based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), calculated monthly by the Bureau of Labor Statistics.
- COLA Calculation: A COLA effective for December is derived from the percentage increase (if any) in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last COLA-effective year. Any increase is rounded to the nearest tenth of one percent.
- Impact of Increases: If there is an increase in CPI-W, it reflects as a COLA adjustment in Social Security benefits. Conversely, if there’s no increase or the rounded increase is zero, there is no COLA for the year.
With all the talk about Inflation; how, does that factor into COLA calculations
The standard measure for inflation is CPI (consumer price index). The CPI for 2023 (which is December 2022 to December 2023) was 3.4%.
The 3.4% represents the price increase in all consumer items. This price increase is representative of inflation.
Railroad Retirement COLA 2024
Fortunately, both tier 1 and tier 2 components of Railroad Retirement receives a COLA. In January 2024 the cost of living adjustment increased 3.2% for Tier 1.
And Tier 2 received a 1.0% increase.
Inflation increase was 3.4% (2023), and the railroad retirement cola 2024 increase was 3.2% and 1.0%. Did I get a raise or not?
The “short line” answer is yes! And not for the obvious reason of the increase dollar amount from 2023 to 2024.
If we looked at a percent to percent basis of cost of all items increase, and compared that to the railroad retirement increase’ our estimate shows that the median retired railroader saw roughly a 3.7% increase dollar for dollar.
Interested in the 2024 Railroad Retirement numbers that matter most? Check out the info graphic below :
Railroad Unemployment Increase
Railroader qualifying for unemployment will see a increase from last years unemployment daily rate. 2024 daily rate is $94 starting on July 1st, 2024.
Conclusion
Understanding Railroad Retirement COLA 2024 is crucial for retirees to gauge the adequacy of their benefits amidst inflation. By delving into the calculation methods and the actual adjustments, retirees can assess the real impact on their purchasing power.