Social Security will have important changes in 2024 that will directly impact your finances. We present three fundamental changes that you need to keep in mind.
earnings limit for social security 2024 max social security 2024 what changes are coming for social security 2024 social security 2024 limit social security 2024 tax social security 2024 earnings limit chart social security 2024 bend points social security 2024 part b premium social security 2024 wage cap social security 2024 fact sheet
In the coming year, Social Security will have significant changes that will directly affect your finances. Here are three key changes to keep in mind.
- Increase in COLA Benefit
- Even though there was a considerable decline in 2023 inflation, consumer prices continued to rise. This in turn caused a 3.2% increase in the Cost of Living Adjustment (COLA) for Social Security beneficiaries.
- This adjustment will raise the average amount of money that retirees receive by $59 per month, going from $1,848 to $1,907 dollars as of January, as reported by the Social Security Administration (SSA).
- This increase is lower than the 2023 COLA of 8.7%, but is still slightly higher than the historical average since the 1990s, which was around 2.5% annually.
- Those who claim Social Security payments at full retirement age in 2024 will have a maximum payment of $3,822 per month, up from $3,627 in 2023.
- Medicare Premium Offset
- If you’re enrolled in Medicare, your Part B premiums will likely be deducted directly from your Social Security payments. This means that if Medicare premiums increase, it could decrease the cost of living adjustment you receive.
- After a brief period of relief in 2023, where the generous increase in the COLA coincided with a reduction in Medicare premiums, the offset returns in 2024.
- The standard monthly Part B rate will go from $164.90 to $174.70, resulting in a decrease of approximately $10 per month in the COLA increase you receive.
- Social Security Taxes
- Social Security benefits are funded primarily by a 12.4% tax on the income of most workers.
- If you have a job, you pay half that rate (through FICA withholding from your wages), and your employer covers the rest.
- If you are self-employed, you pay both parts as part of your annual tax return.
- Although the rate has been constant since 1990, the amount of income subject to this tax changes annually based on national wage trends.
- In 2023, workers had to pay Social Security taxes, but you only had to pay those taxes if you earned up to $160,200 a year.
- In 2024, the threshold increases to $168,600. This means that if you earn more than $168,600, you won’t have to pay additional taxes to fund Social Security on that extra portion of your income.
