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Find Out How Social Security COLA Changes Will Impact Retirees in 2024

Social Security COLA
Social Security COLA; Source- MONEY

For almost 90 years, Social Security has provided a stable income for retirees in the United States. Yet over time, it has changed. While some of those adjustments have been beneficial, others have not. Next year’s tale for the government’s program will be much the same. The two greatest and one worst major changes to Social Security in 2024 are listed below.

Social Security COLA

Social Security COLA; Source- AS USA

Social Security Changes In 2024

Out of all the changes, one to Social Security seems to be the greatest. Benefits for retirees will rise starting in January 2024. The SSA declared a 3.2% COLA last month. The goal of this COLA is to lessen the impact of inflation on the purchasing power of Social Security income. Compared to the 8.7% boost retirees earned in 2023, the 3.2% rise will be substantially less. On the other hand, inflation has been moving down a little. Furthermore, the 2019 COLA will be the third largest in the previous 11 years, while being less than the adjustment for this year. This beneficial adjustment to Social Security has a few drawbacks. By 2023, retirees will have to pay more for their higher bills, and the greater benefits won’t help them until much later. Additionally, given the rising cost of healthcare, the COLA may not be sufficient to completely offset the higher rates that seniors must pay.

Many seniors will benefit from another Social Security update in 2019. In 2024, there will be increased earnings limits for employees who start receiving retirement benefits before their FRA. For any individual who starts collecting Social Security benefits before their FRA, the SSA withholds $1 from payments for each $2 earned beyond a predetermined level. In 2023, that amount was $21,240. It is going to rise to $22,320 next year. Benefits will be lowered by $1 for each $3 earned over another set cap during the year a person achieves FRA. In 2023, this cap was $56,520. In 2024, it will rise to $59,520. Benefits that have been previously withheld will begin to be reimbursed when employees achieve their FRA. However, many people who claim retirement advantages early but keep working will have more disposable income as a result of this change to Social Security.

Worst Change In Social Security COLA 2024

One modification to Social Security will not sit well with all Americans. There will be additional taxes due. At the moment, the Federal Insurance Contributions Act (FICA) payroll tax, which supports Social Security and Medicare, is only applied to the first $160,200 of income. Starting January 2024, the maximum taxable earnings ceiling will rise by 5.2% to $168,600. However, the majority of individuals will not be impacted by this backdoor tax rise. Numbers indicating the proportion of Americans earning more than $168,600 are not easily accessible.

Nonetheless, Statista estimates that 11.5% of American households made 200 thousand dollars or more in 2022. 8.7% more households made from $150,000 to $199,999 every year. Even if those are the two finest changes coming to Social Security and the worst already planned, there’s another aspect of the program that will remain unchanged and merits dishonorable mention. If nothing is done to avert Social Security’s insolvency, another year will pass. According to projections made by the impartial Congressional Budget Office, Social Security’s joint trust funds would exhaust their funds in 2033.

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