The Social Security Administration Has Announced Cost of Living Adjustments & Tax Changes For 2024. Here's What You Need to Know
The Social Security Administration recently released important facts and figures for 2024 - including cost-of-living adjustments (COLA) for retirees and tax changes for the currently employed.
The Good? Benefits Are Increasing
Those receiving Social Security benefits will see a 3.2 percent COLA increase in 2024. This change will impact around 66 million Americans - including 7.5 million SSI beneficiaries.1
For the average retiree receiving Social Security benefits, this will translate to a $59 increase in monthly benefits - $1,907 up from $1,848
While this year's increase is more modest than the 8.7% increase of 2023 or the 5.9% increase of 2022, it still surpasses the historical 2.5% average increase of the past three decades.1
The Bad? Taxes Are Increasing Too (For Some)
For those still working, the amount of earnings subject to Social Security tax has increased from $160,200 in 2023 to a maximum of $168,600 in 2024. Employees and their employers will each continue to pay 6.2 percent of applicable earnings toward the 7.65 percent combined Social Security and Medicare rate. Self-employed individuals will still be responsible for paying the full 15.3 percent of the Social Security and Medicare tax rate.3
The Need To Know? Earning Limits For Retirees
For those under the Social Security Administration’s determined full retirement age who are receiving a paycheck while receiving SS benefits should be aware of 2024’s earning limit changes.
Currently, full retirement age is considered to be 67 if you were born between in 1960 and later. Below is a chart provided by the SSA in regard to full retirement age:
| Year of Birth |
Full Retirement Age |
|---|---|
| 1943-1954
|
66
|
| 1955
|
66 & 2 months
|
| 1956
|
66 & 4 months
|
| 1957
|
66 & 6 months
|
| 1958
|
66 & 8 months
|
| 1959
|
66 & 10 months
|
| 1960 & later
|
67
|
Those receiving benefits who have not yet reached full retirement age will be docked $1 in benefits for every $2 earned above $22,320 (or $1,860 per month) in 2024. This is an increase of $1,080 from 2023's $21,240 per year limit.3
It’s important to note that this limit also increases for those who will be reaching full retirement age that year. For 2023, that income limit is $56,520 per year or $4,710 per month. In 2024, retirees will see that limit increase to $59,520 per year or $4,960 per month. Applicable income earned above this amount will be withheld at a rate of $1 dollar for every $3 earned above the limit.3
Beginning in the month you reach full retirement age, you will no longer be subject to earning limits.
Keeping track of changes in tax rates and future income is an important part of having a well-established retirement plan. If you’re wondering how these changes will affect your own financial standings, reach out to your financial advisor for more information.
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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.