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Cost of Living Increase in 2024: More Money for Social Security and SSI
Last Updated:  December 24, 2023  |  

Cost of Living Increase in 2024: More Money for Social Security and SSI

In 2024, something good is happening for more than 71 million Americans. The Social Security Administration is giving them a boost in their money. This extra money is called a "Cost-of-Living Adjustment" or COLA. It's happening because the cost of living, or how much things cost, keeps going up. This is making it harder for older folks and people with disabilities to make ends meet.

This COLA increase will start in January 2024. It will affect over 66 million people who get Social Security. For those who rely on SSI, the increase starts a little earlier, on December 29, 2023. If you're a Social Security retiree, you can expect to get about $50 more each month. This extra money will help you deal with the rising prices of things like food and rent.

But there's more good news besides the extra money. This COLA increase will also change some important numbers related to Social Security that can help all Americans, especially those planning to retire.

Social Security Earnings in 2024

For people working and planning for retirement, here are the updates to Social Security earnings in 2024:

  1. Maximum Taxable Earnings: The most money you can earn and still pay Social Security tax is going up to $168,600 in 2024. It was $160,200 in 2023. This means that people who make a lot of money will still pay into the Social Security system and could get more money when they retire.

  2. Earnings Limits Before Benefits Go Down: If you haven't reached the age when you can fully retire, you can earn up to $22,320 before your Social Security benefits start to go down. For every $2 earned above this limit, $1 will be deducted from benefits. This means you can plan how much you earn to get the most money possible.

  3. Earnings Limit at Full Retirement Age: If you reach full retirement age in 2024, you can earn up to $59,520 before your benefits get reduced. But be careful! For every $3 you earn above this limit until you reach full retirement age, $1 will be taken from your benefits.

How COLA Is Calculated

You might be wondering how they figure out how much COLA to give each year. The CPI-W is used as the basis for calculating the Consumer Price Index for Urban Wage Earners and Clerical Workers. This is a way to measure how much the prices of things like groceries and services change over time. So, the COLA increase is connected to how much more it costs for people to live. It's not a perfect solution to rising prices, but it helps a lot of people who rely on Social Security and SSI to pay their bills.

Social Security Changes in 2024 After COLA Increase

To sum it up, here are the main changes coming because of the 3.2% COLA increase in 2024:

  • Tax Rates: The taxes you pay for Social Security and Medicare won't change. They will stay at 7.65% and 1.45%, respectively. If you earn a lot (over $200,000 for individuals or $250,000 for married couples), you'll also pay an extra 0.9% for Medicare.

  • Maximum Taxable Earnings: The most money you can earn and still pay Social Security tax is going up to $168,600.

  • Retirement Earnings Test Exempt Amounts: If you're not fully retired yet, you can earn up to $22,320 per year before your benefits go down. If you're at full retirement age, you can earn up to $59,520 per year.

  • Social Security Disability Thresholds: The most money you can earn and still get disability benefits will be $1,550 per month for non-blind people and $2,590 per month for blind people.

  • Maximum Social Security Benefit: The most money you can get from Social Security if you retire at full retirement age is $3,822 per month.

  • SSI Federal Payment Standard: If you get SSI, you'll get $943 per month if you're on your own, and $1,415 per month if you're in a couple.

  • Estimated Average Monthly Social Security Benefits: After the COLA increase, retired workers will get an average of $1,907 per month, and retired couples will get an average of $3,033 per month.

In conclusion, the COLA increase in 2024 is good news for millions of Americans. It will help them deal with the rising cost of living in the coming year. These changes show that Social Security is an important safety net for people as they retire.

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