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The Social Security Administration announced that it’s raising benefits to recipients by 3.2 percent in 2024. The cost-of-living adjustment (COLA) will apply to nearly 67 million who receive Social Security and more than 7 million who receive Supplemental Security Income. With the increase, the average Social Security monthly benefit check will rise by about $54.59.
The COLA for 2024 returns the series of annual adjustments to a more normal level. The increase follows last year’s rise of a whopping 8.7 percent, which was the largest gain since 1981, when benefits climbed a stunning 11.2 percent after the U.S. suffered severe inflation.
Besides the increase in benefits, the government agency also announced that it was raising the level of wages subject to Social Security taxes, known as the taxable minimum. In 2024, Social Security will tax wages up to $168,600, up from $160,200 in 2023. The change takes effect in January 2024, though the tax rate on those wages, 6.2 percent, will remain the same.
After a period of rising inflation over the last couple years, the increased benefits allow retirees and others who depend on Social Security to replace their purchasing power. At the same time, the higher taxable minimum means that higher-earners will pay more taxes to fund the program.
Social Security recipients will be notified in December about the exact amount of their new benefit check, and they can turn to their Social Security account for further details, too.
How the 2024 COLA compares to recent adjustments
As of August 2023, the average Social Security recipient received a monthly benefit of $1,705.79. But the average retired worker did a bit better, receiving a check of $1,840.27.
What could the average recipient receive in 2024? The COLA is based on the Consumer Price Index for urban wage earners and clerical workers, known as the CPI-W. With the increases for 2024, the average benefit overall would rise to $1,760.37, while the average retired worker would receive $1,899.16.
The table below shows the increases over the last decade in the year they were announced.
|Year||COLA increase||Year||COLA increase|
Source: Social Security Administration
While the announced increase for next year wasn’t as high as this year’s – which came in at a multi-decade high – it’s somewhat better than what Social Security recipients have received over the last ten years. And it’s important to know the program does not announce a decrease in payments, but rather does not increase payments for a given year, as in 2015.
This year’s Social Security COLA offered seniors and others a better-than-usual increase to their payouts, though the downside is that everyone had to endure rising inflation to get it. If you’re considering filing for Social Security, you’ll want to carefully plan for when to take it, since your age is one of the biggest factors in your total payout. You could earn tens of thousands of dollars more by claiming at the right age. Here’s how to estimate your Social Security benefits.