In 2024, Social Security and Supplemental Security Income (SSI) benefits will see a Cost-of-Living Adjustment (COLA) of 3.2 percent, benefiting over 71 million Americans. This adjustment is designed to maintain the purchasing power of Social Security benefits in the face of inflation.
COLA Figures and Limits
The taxable maximum, the maximum amount of earnings subject to the Social Security tax, will increase to $168,600. This figure is significant for high earners who contribute to Social Security through payroll taxes.
For workers below full retirement age, the earnings limit will increase to $22,320. Beyond this threshold, $1 will be deducted from benefits for every $2 earned over $22,320. Workers reaching full retirement age in 2024 will face an increased earnings limit of $59,520. For every $3 earned over this limit until the month they turn full retirement age, $1 will be deducted from benefits. No earning limits apply for workers who are full retirement age or older for the entire year.
COLA Notices and Historical Context
In December 2023, Social Security COLA notices will be available online through the Message Center of the my Social Security account for most beneficiaries.
The COLA provision, enacted as part of the 1972 Social Security Amendments, introduced automatic annual COLAs in 1975. Before that, Congress had to pass special legislation for benefit increases. Tying COLAs to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) ensures a consistent and fair adjustment based on inflation.
Navigating Changes as a Beneficiary
Understanding the key figures and limits associated with Social Security is essential for beneficiaries. As the COLA reflects the percentage increase in the CPI-W, recipients of both Social Security and SSI benefits should stay informed about these changes. These adjustments play a crucial role in optimizing retirement strategy, and consulting with Fee-Only financial advisers or professionals experienced in Social Security matters can provide personalized guidance based on individual circumstances.
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