Understanding Your Social Security Benefits Adjustment for 2024
Did you know that Social Security benefits are set to increase in 2024? In fact, over 71 million Americans will see an increase in their benefits by next year! But what is the percentage of the increase? When will these changes go into effect? The good news is that you’re in the right place to have all those questions answered! Here’s everything you need to know.
How Much Is the Increase?
Social Security benefits will increase by 3.2% in 2024. For context, that’s about a $50 increase in retirement benefits! Of course, this increase is in response to the rising cost of living, as measured by the Department of Labor’s Consumer Price Index. Additionally, the maximum Social Security benefit for a worker retiring at full retirement age will increase to $3,822.
- The COLA (Cost-of-Living Adjustment) is an automatic adjustment to Social Security benefits that helps to keep up with the rising cost of living.
- The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- The COLA is applied to all Social Security benefits, including retirement, survivor, and disability benefits!
When Will the Change Go into Effect?
The COLA (cost-of-living adjustment) will be applied to all Social Security benefits beginning in January 2024. The 3.2% increase will apply to all Social Security benefits, including retirement, survivor, and disability benefits. If you also receive SSI benefits, increased payments will begin on December 29th, 2023.
Are There Any Other Changes on the Horizon?
In addition to the increase in Social Security benefits, there are several other changes on the horizon that you should be on the lookout for! In 2024, the maximum amount of earnings subject to Social Security payroll tax will increase to $168,600 (according to Kiplinger). Additionally, the retirement earnings test exempt amount will increase to $22,320 per year (or $1,860 per month) for individuals under full retirement age and to $59,520 per year (or $4,960 per month) for individuals at or above full retirement age.
How Can I Apply for the Benefit Increase?
Fortunately, you don’t have to do anything to receive the benefit! The Social Security Administration will automatically apply the COLA to your benefits starting in January 2024. According to the SSA, you should receive a COLA notice in the mail by this December. However, if you’d like to know your benefit amount sooner than that, the SSA notes that you can obtain your COLA notice online through their secure portal. If you have any questions about your Social Security benefits, you can contact the SSA at 1-800-772-1213 or visit their website at www.ssa.gov.
The Harsh Reality of Inflation
Unfortunately, while everyone will welcome the increase, it’s becoming harder to keep up with soaring inflation. Even with the record-high 8.7 percent increase, most people are spending more and making less. As recently stated by Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League. “Nobody is getting rich. The reality is that the dollar amount of the COLA increase received is meager at best, with the average monthly retiree benefit only $1,790 in 2023.”
The Catch-22 of Benefit Increases
The Catch-22 of Social Security benefit increases refers to the fact that while the increases are intended to help recipients keep up with the rising cost of living, they can also lead to higher Medicare premiums. This is because Medicare premiums are based on a portion of Social Security benefits, so when benefits go up, premiums also go up. For example, in 2023, Social Security benefits increased by 8.7%, while Medicare Part B premiums increased by 14.5%. This meant that for many seniors, the increase in their Medicare premiums offset the increase in their Social Security benefits. The Catch-22 of Social Security benefit increases is a challenge that needs to be addressed in the years to come. It’s important to find a solution that helps to ensure that seniors have access to the healthcare they need without putting undue financial pressure on them.
Pushing for Change
The Senior Citizens League is advocating for Congress to adopt legislation that would adjust the index to inflation specifically for older adults. Their aim is to introduce legislation for comprehensive Social Security reform. They’re also fighting for COLA fairness. According to the Senior Citizens League, 2024 is yet another year in which we do not see a boost in net benefits due to Part B premiums, which are rising faster than Social Security COLAs. Fortunately, they are raising awareness and are committed to their advocacy work to see real change happen for seniors. If you would like to learn more about them and their mission, click here.
To Sum It Up
Knowledge is power, especially when it comes to understanding how your retirement benefits work. If you’d like to read even more articles about Social Security, we’ve got you covered! Make sure to check out these great articles next:
Popular Articles About Social Security
Originally published November 16, 2023
Author(s):
