Every year about this time, the Social Security Administration (SSA) announces the new cost-of-living adjustment (COLA) for those receiving Social Security benefits. Seniors everywhere look forward to the announcement, wondering if it will be enough to offset the current and projected inflation rate.
The announcement has been made. The Social Security benefits increase for 2024 is set at 3.2 percent. The increase is much smaller than it was for 2023, but it is because the economy is showing signs of being more stable.
The 2023 COLA Raise
When the new Social Security benefits COLA 2023 is to be determined, it is based on the inflation rate during the third quarter—July through September. The SSA says the inflation rate comes from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index is recalculated each month.This year’s inflation rate is compared to last year’s third-quarter inflation rate. The percentage difference determines what the new COLA rate will be. The third-quarter inflation rate for 2023 is 3.2 percent higher than during the third quarter last year. When there is no difference, there is no COLA.
When Will the Raise Come?
The new COLA payments start in December 2023. It means you will see an increase in your January 2024 Social Security payment.How Much to Expect on Your January Check
The average person getting Social Security payments will receive an average of about $58 more starting in January. CNET reports that workers with disabilities can expect about $47 more; a senior couple where both get Social Security benefits will get about $95 more; a widow(er) will get about $55 more; and a widow(er) with two children will receive an average of $113 more.People with higher incomes may see a decrease in their Social Security benefits. Forbes reports that the ceiling for taxable income on Social Security benefits has increased, causing more of your income to be taxed. The ceiling has been raised 5.2 percent, bringing it to $168,600 for 2024. It was $160,200 in 2022—$8,400 less.
The Maximum Taxable Earnings for Social Security
When you earn more than a specified amount of money and receive Social Security benefits, you get taxed on some of those benefits. The SSA says that retirees who have not yet reached their full retirement age, but earn more than $22,320, will have their benefits reduced by $1 for every $2 earned over the limit.Once you reach your full retirement age, you can earn up to $59,520 without the penalty. Earn more than that, and you will find your benefits reduced by $1 for every $3 over that limit. After you have been your full retirement age for one year, there are no limits on how much you can earn.
Supplemental Security Income Benefits
People who receive Supplemental Security Income (SSI) benefits will also get a COLA increase of 3.2 percent. CNET mentions that people getting SSI benefits will receive their first benefit at the end of December of this year. Since the first of the year falls on a holiday, your payment is sent earlier.The COLA May Not Be Enough
Many seniors living only on Social Security have difficulty making ends meet, even though there was a significant COLA increase this year. Gas and food costs have risen considerably and are not likely to come back down. CNBC reports that taxes may consume the additional amount for some people.One group, the Senior Citizens League, as reported by NBCNews, claims that the COLA payments since 2000 have not been enough. They say that to give seniors the same buying power they had in 2000, they would need to get an additional $500 monthly.
Increased Medicare Costs
One expense that decreases the COLA benefit is the cost increase of Medicare premiums for Part B. The Federal Register indicates that the new rate for Medicare Part B will be $174.70, which is $9.80 higher than in 2023. It is a 6 percent increase. Since Medicare premiums are removed before being sent, seniors will likely never notice it.
Another problem noted by the AARP is that the cost of medical treatments is rising faster than inflation. Since seniors need more medical care than most other people, much of their income goes toward taking care of medical needs.
Possible Reduced Social Security Benefits in the Future
Even though Social Security can pay a COLA now, it is questionable what they might do in the not-too-distant future. An annual report released by the Social Security and Medicare trustees in March 2023 says that Social Security retirement benefits could be reduced to 77 percent of the regular benefit amount.It is up to Congress to take action on the problem. So far, no serious action has been taken, but several proposals were submitted that showed how to avoid the potential shortfall. The APNews says that all proposals so far have been limited to committee meetings. Another potential problem is that the SSA does not have a permanent leader to help push the matter through Congress.
The Maximum Social Security Benefit
At full retirement age, there is a maximum benefit that an individual can receive. For 2023, the SSA reports that the maximum benefit for an individual is $3,627 per month. It has been raised to $3,822 for 2024, which is $195 more.The Social Security benefits increase helps many seniors and those getting SSI benefits to meet their financial demands for the year. Seniors having a difficult time financially should talk to their Social Security Administration’s office near you to determine if there are more benefits you could receive. State and local programs may also provide some help.
The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
