If you would like to start retirement, you should take into account that your age matters. Bear in mind that the earliest age to file for Social Security payments is 62. However, this will mean receiving less money every month. So, not everyone should apply for retirement benefits so early.
As a matter of fact, the more you wait to file, the higher your Social Security payment will be. That only works until you are 70 years old, then, it is time to retire because your retirement benefits will not grow anymore. In just a few years, your benefits can grow by 24%. Some citizens will have to wait longer.
If you were born in 1960 or later, your Full Retirement Age is 67. But only those seniors who were born in the first 3 months of the year 1958 can be eligible for the Full Retirement Age in 2024. So, if you were born in 1958, your Full Retirement Age will be 66 and 8 months.
There will be a new taxable maximum in 2024 for Social Security
Remember that you must pay taxes to the Administration as you work. If you do not pay any taxes, you will not receive Social Security benefits. For retirement and SSDI (disability benefits), you will need to have worked. Otherwise, you will not be eligible for any monthly payments like these.
As you pay payroll taxes you earn work credits to qualify for future payments. However, if you are a high earner, you will only pay taxes up to a limit. This limit is going up in 2024, and some American workers will have to pay a little more. A worker will have to pay 6.2% of up to $168,600 of earnings.
That means a worker can only pay up to $10,453.20 in 2024 in payroll taxes to Social Security. Of course, the lower your salary, the less money you will pay on taxes. But then, your future payment will be lower too. If you earn more than 168,600 dollars, you will not have to pay additional taxes.
The cap is $160,200 in 2023, so that means that workers can pay up to $520.80 more in 2024. This may not seem like a lot of money if you are wealthy, but if you are a high earner and you are on a tight budget, it could be a great deal of money.
Social Security and the COLA increase in 2024
Every year, the Social Security Administration (SSA) checks inflation. If there is inflation, retirement, SSDI and SSI benefits will grow. Thanks to the Cost of Living Adjustment (COLA), beneficiaries can receive more money.
In this way, the Administration tries that recipients do not lose their buying power. However, the new COLA seems to be a disappointment for many Americans since they believe prices for food, goods, and services are still too expensive.
The new COLA will raise benefits by 3.2%. Since the 2023 COLA was 8.7%, it may seem a lot less. But it is better than nothing and it is much higher than the average COLA for all the years it has existed. Those citizens who believe that the COLA is useless and not enough, can save that money.
So, they should keep it for a whole year. By the end of the year, they will have a fantastic emergency fund. On average, Social Security benefits will grow by $50. For example, a retiree can receive about 58 dollars extra per month. An SSI can receive up to 29 dollars. The higher your payment, the more dollars you get.