Social Security Announces Two Important Changes Effective in 2024

Social Security Announces Two Important Changes Effective in 2024. The Impact of Social Security Changes on Your Monthly Payments and Budget Planning.

Cost of Living Adjustment (COLA) Update

Each year, Social Security updates its payments to help beneficiaries keep pace with the rising cost of living. These updates are crucial for individuals relying on retirement, Supplemental Security Income (SSI), or disability benefits to make ends meet.

However, given the exorbitant prices and mortgage interest rates, the conventional COLA increase might not suffice for these beneficiaries. As a result, a new COLA increase was announced in early September, marking the first of the upcoming changes to Social Security. Unfortunately, the actual increase might be lower than expected.

Anticipating the 2024 COLA

The Senior Citizens League predicts a 3.2% increase in the 2024 COLA, which is significantly different from the 8.7% increase in 2023. This change comes as a relief for those who have been grappling with soaring prices in recent times. However, beneficiaries will not see this additional money until January 2024, even though they will learn about it in October.

Taxation Changes in Social Security

Another significant change in Social Security pertains to taxes. Working individuals are required to pay taxes to the Social Security Administration (SSA) to become eligible for retirement or disability benefits, such as Social Security Disability Insurance (SSDI).

With the increase in inflation, the taxable maximum, also known as the contribution and benefit base, must also rise. This represents the maximum portion of your earnings subject to taxation by the SSA. Importantly, it determines the size of your SSA benefits, but only if you’ve earned it over 35 years and retire at the age of 70.

Strategic Considerations for Maximizing Benefits

It’s worth noting that delaying retirement can lead to higher Social Security benefits. Additionally, it’s possible to combine these benefits with income from work activities. Understanding these changes and planning accordingly is vital for effectively managing your Social Security benefits in 2024 and beyond.