Have you noticed a slight increase in your Social Security benefits lately? Starting January 2024, more than 71 million Americans can expect an average increase of $50 per month in their social security retirement benefits thanks to a 3.2% cost-of-living adjustment.
In a press release, the Acting Commissioner of Social Security, Kilol Kijakazi, noted the increase to both Social Security and Supplemental Security Income (SSI) benefits will, “help millions of people keep up with expenses.” This comes as no surprise considering inflation rose by 3.4% in 2023 and savings accounts across the country have steadily dwindled.
The 3.2% increase is a welcomed income addition to help offset these rising costs. Here are the Social Security cost-of-living adjustments that you can expect.
- 3.2% cost-of-living adjustment will reach Social Security benefits receivers starting January 2024
- Increased payments to 7.5 million SSI recipients started December 2023
- The maximum amount of earnings subject to the Social Security tax will increase to $168,600
- The earnings amount for workers who have not yet reached full retirement age will increase to $22,320
- The earnings limit for workers who have reached full retirement age in 2024 will increase to $59,520
- There is no limit for workers who are already at full retirement age or older for the entire year
Social Security beneficiaries can expect a cost-of-living adjustment notice available in their my Social Security account which details the updated benefit rates per individual along with other pertinent information.
History of Cost-of-Living Adjustments
While benefit receivers can celebrate the cost-of-living adjustment, it’s not out of the ordinary for the Social Security Administration (SSA) to reassess and adjust based on a number of economic factors, like inflation. In 1975, the SSA began automatic cost-of-living adjustments to counteract the effects of inflation and maintain purchasing power of recipients.
To determine the cost-of-living adjustment for the upcoming year, the Social Security Administration considers changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the average price changes over time of goods and services. If there are no changes to this metric, there are no cost-of-living adjustments.
Maximize Your Social Security Benefits
The 3.2% benefit boost will bring a welcome relief to Social Security receivers. This adjustment will help retirees, disabled individuals, and their families keep up with the rising costs of healthcare, housing, and other necessary expenses.
To make the most of the Social Security cost-of-living increase in 2024, it is essential to have a solid financial plan in place. Here are a few strategies to consider as you reassess your finances:
Evaluate Your Budget: Assess your current income and expenses and adjust your budget accordingly. Prioritize essential needs and allocate funds wisely to make the most of your benefits.
Review Retirement Goals: Take the opportunity to revisit your retirement goals and reassess your long-term financial objectives. Adjust your savings and investment plans to align with your desired lifestyle.
Seek Professional Guidance: Consult a financial advisor who can help optimize your Social Security benefits. They can help you navigate complex financial decisions and provide personalized strategies tailored to your unique circumstances. Prudent Investors is here to help.
Remember, the Social Security cost-of-living adjustments for 2024 presents an opportunity to enhance your retirement income. With careful planning and strategic financial management, you can ensure a more secure and comfortable future. If you’re interested in social security modeling or goal-based financial planning, we welcome you to connect with Prudent Investors.
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