In a short time we will say goodbye to 2023 and a series of important changes will take place that will have an impact on the benefits that United States retirees get. There will be two major milestones at the Social Security Administration (SSA).
What are they about? If there has been an annual CPI-W increase, the SSA will increase Social Security payments. Because it is calculated based on changes in the CPI-W, the increase to Social Security payments may be higher or lower.
It is worth mentioning that the first change will take effect in January 2024, and has to do with the Cost of Living Adjustment (COLA), which will be announced in October of this year. It is also expected that in that month the SSA will inform of the most important changes that will go into effect and that have to do with the institution and the benefits that retirees receive.
What are the two most important changes Social Security will make?
Next year, 2024, Social Security will make two major changes for citizens: COLA benefits and taxes. Let’s find out all the details below:
COLA and its benefits
Retirees will know in October of this year the percentage increase in COLA benefits. This will be effective as of January 2024. This is done so that retirees can defend themselves, in some way, from the effects of rising prices.
All COLAs are based on inflation data for the third quarter of the year, which runs from July through September of the current year. By 2024, it is expected to be as high as 3% or 3.2%, at most.
Taxes and Social Security
The second change that will take effect in 2024 is the Social Security payroll tax. While most believe that you pay taxes on your earnings, the truth is that only a cap on earnings is taxable, which is $160,200 by 2023. This amount is tied to the national average wage index, so it tends to increase each year.
Then, at the same time the 2024 COLA is released, the SSA will release the specific maximum taxable earnings limit for the following year. According to the Board of Trustees it is estimated to be $167,700.
What monthly payments increase with COLA 2024?
Keep in mind that the upcoming boost in Social Security payments will make a big difference, especially for those who rely on them. Additionally, the Supplemental Nutrition Assistance Program (SNAP), which helps people with their food expenses, will also see an increase in benefits in 2024 due to the COLA adjustment.
But it’s crucial to remember that SNAP has rules, including a ban on using benefits to buy alcohol.
Kilolo Kijakazi, the acting Social Security commissioner, explained, “The 2024 increases in Social Security and SSI benefits will provide much-needed financial relief for millions, helping them cover their daily costs.” These adjustments are vital because they help beneficiaries keep up with the rising cost of living. They also highlight the importance of government support programs like SNAP, which play a crucial role in assisting people in need.
These changes aim to offer economic support to program beneficiaries by adapting their benefits to match the continually increasing cost of living. This ensures that they can better meet their financial needs in today’s world.
How can I buy my benefits with other helps
The maximum amount that a retired worker claiming his or her pension at full retirement age will get in 2024 will be $3,822 per month, up from $3,627 per month in 2023.
According to the Social Security Administration, the average benefit for all retired workers in 2024 will be $1,907 per month, in contrast to $1,848 in 2023.
Before and after the 3.2% cost-of-living adjustment:
Maximum benefit – For worker retiring at full retirement age | 3,822 | 3,627 |
---|---|---|
Widowed mother + 2 children | 3,653 | 3,540 |
Aged couple – Both receiving benefits | 3,033 | 2,939 |
Disabled worker – Spouse + 1 or more children | 2,720 | 2,636 |
All retired workers | $1,907 | $1,848 |
Aged widow(er) | 1,773 | 1,718 |
All disabled workers | 1,537 | 1,489 |