Get ready for a boost in your Social Security payout! In 2024, more than 71 million Americans are expected to experience a 3.2 percent increase in their Social Security payments, translating to an average rise of over $50 per month. This significant adjustment is a response to the cost-of-living changes confirmed by the Social Security Administration, aimed at helping recipients manage their expenses. Read Also: The Black Tax Dilemma: Building Wealth While Supporting Family
Cost-of-Living Adjustment and Benefit Payments
For the third consecutive year, inflation triggers a hike in benefit payments, albeit less than the unprecedented increases of the past two years (8.7 percent in 2023 and 5.9 percent in 2022). Both Social Security and Supplemental Security Income (SSI) recipients will witness this growth, with the average monthly benefits set to rise from the 2023 estimates of $1,711 for Social Security and $674 for SSI.
The cost-of-living adjustment (COLA) for 2024 is 3.2 percent. This increase will begin with Social Security beneficiaries’ benefits in January 2024. The maximum earnings subject to Social Security tax will increase from $160,200 to $168,600 in 2024. As a result, the maximum Social Security tax will jump from $9,932 to $10,453 for those earning more than $168,600. The average Social Security retirement benefits will increase by more than $50 per month starting in January 2024. The top benefit in 2024 will approach $5,000 per month.
Full Retirement Age and Benefit Distribution
Social Security benefits distribution is tied to the beneficiary’s birth date. For instance, those born between the 1st and 10th of the month will see their payments on the second Wednesday, reflecting the first cost-of-living increase on Jan. 10. Understanding these distribution details is crucial for beneficiaries planning their finances. Read Also: Changes in Social Security Payment: What You Need to Know
Changes in Social Security Tax
Social Security recipients can anticipate a rise in the maximum taxable earnings for 2024. The maximum amount of earnings subject to the Social Security tax will increase by $8,700 from $145,800 in 2023 to $168,600 in 2024. This means that workers earning over $168,600 in 2024 will not have to pay Social Security taxes on earnings above that amount. This adjustment is expected to benefit high-income workers who will see a decrease in their Social Security tax contributions.
Full Retirement Age Increase
The full retirement age for Social Security benefits will rise by two months in 2024, affecting those born in 1959. Understanding this adjustment is vital for individuals planning to retire in 2024, as they will have to wait two additional months for their full Social Security payout.
Bottom Line
It is essential for beneficiaries to comprehend these changes and their impact on benefits. Staying informed allows individuals to plan their finances effectively and make informed decisions about their retirement.