Social Security payments will rise 3.2% in 2024

Social Security payments will rise 3.2% in 2024

Social Security is a vital source of income for millions of Americans, especially retirees and disabled people. The amount of money that beneficiaries receive each month depends on several factors, such as their earnings history, age, and inflation. Every year, the Social Security Administration (SSA) announces a cost-of-living adjustment (COLA) that affects the payments for the next year.  The SSA announced that Social Security payments will rise 3.2% in 2024. This article will explain what this means for current and future beneficiaries, and how to make the most of your Social Security benefits. 

The cost-of-living adjustment is calculated based on an average of the inflation readings for the months of July, August and September. Specifically, it’s based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published by the Bureau of Labor Statistics. Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices. Almost 67 million people have been receiving Social Security benefits in 2023, according to the SSA. 

Why do Social Security payments change every year? 

Social Security payments are designed to keep up with the rising cost of living, which is measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W tracks the changes in prices of goods and services that typical workers buy, such as food, housing, transportation, and medical care. When the CPI-W goes up, it means that inflation is eroding the purchasing power of money. To prevent this, the SSA adjusts Social Security payments based on the percentage change in the CPI-W from the third quarter of one year to the third quarter of the next year. This is called the COLA. 

How much will Social Security payments increase in 2024? 

According to the SSA, the average monthly Social Security payment for retired workers in 2023 was $1,565. With a 3.2% COLA, this amount will increase to $1,614 in 2024, an extra $49 per month or $588 per year. The average monthly payment for disabled workers in 2023 was $1,277. With a 3.2% COLA, this amount will increase to $1,318 in 2024, an extra $41 per month or $492 per year. The maximum monthly payment for workers who retire at their full retirement age in 2024 will be $3,345, up from $3,148 in 2023. 

What does this mean for retirees and workers? 

The 3.2% COLA for 2024 is good news for Social Security beneficiaries, as it reflects the higher inflation that they have faced in recent years due to the COVID-19 pandemic and other factors. However, it may not be enough to cover all of their expenses, especially health care costs, which tend to rise faster than inflation. Therefore, retirees and disabled people should not rely solely on Social Security payments for their income needs, but also have other sources of income, such as savings, investments, pensions, or part-time work. 

For workers who are still paying into Social Security through payroll taxes, the 3.2% COLA also means that they will have to contribute more to the system in 2024. The SSA sets a limit on the amount of earnings that are subject to Social Security taxes each year, called the taxable maximum. In 2023, this limit was $142,800. In 2024, it will increase to $147,600, meaning that workers who earn more than this amount will pay an extra $298 in Social Security taxes next year. 

How to plan for your Social Security benefits? 

Social Security benefits are an important part of your retirement income plan, but they are not guaranteed to last forever. The SSA projects that by 2035, its trust funds will be depleted, and it will only be able to pay about 79% of scheduled benefits unless Congress reforms the program. Therefore, you should not count on getting the same amount of benefits as today’s retirees. 

To estimate how much you can expect to receive from Social Security when you retire or become disabled, you can use the SSA’s online calculators or create a personal account on its website. You can also request a copy of your Social Security statement by mail or online, which shows your earnings history and projected benefits. 

To maximize your Social Security benefits, you should consider several factors before claiming them, such as your life expectancy, health status, marital status, work history, and other income sources. Generally speaking, you can start receiving benefits as early as age 62 or as late as age 70. The longer you wait to claim them (up to age 70), the higher your monthly payments will be. However, this does not necessarily mean that you will get more money overall if you live longer than average. 

You should also be aware of how your benefits may be taxed, reduced, or increased depending on your situation. For example, if you work while receiving benefits before your full retirement age, some of your benefits may be withheld if you earn more than a certain limit. If you have other income, such as pensions, dividends, or interest, some of your benefits may be subject to federal income tax. If you are married, divorced, or widowed, you may be eligible for spousal or survivor benefits based on your own or your partner’s earnings record. 

FAQs 

– Q: When will I get my Social Security payment in 2024? 

– A: Social Security payments are usually made on the third of each month, unless it falls on a weekend or a holiday, in which case they are made on the previous business day. You can check the payment schedule for 2024 on the SSA’s website. 

– Q: How can I change my direct deposit information for my Social Security payment? 

– A: You can change your direct deposit information online by logging into your personal account on the SSA’s website, by calling the SSA at 1-800-772-1213, or by visiting your local Social Security office. 

– Q: How can I report a missing or incorrect Social Security payment? 

– A: You should contact the SSA as soon as possible if you do not receive your payment on time or if the amount is wrong. You can call the SSA at 1-800-772-1213, visit your local Social Security office, or use the online form on the SSA’s website. 

Conclusion 

Social Security payments will rise 3.2% in 2024. This is good news for beneficiaries who have faced higher inflation in recent years, but it may not be enough to cover all of their expenses. Workers who pay into Social Security will also have to contribute more to the system in 2024. To plan for your future Social Security benefits, you should estimate how much you can expect to receive, consider when and how to claim them, and be aware of how they may be affected by taxes and other factors. 

My Business Web Space may earn an Affiliate Commission if you purchase something through recommended links in this article.

Can You Deduct Your Car Lease Payments on Your Taxes? 

How Moving to a New City Can Give You a Fresh Financial Start