Social Security recipient in 2024: When a new cost-of-living adjustment is introduced to Social Security payments in January, tens of millions of older Americans will experience a slight rise in benefits.
The 3.2% increase is meant to assist in covering the cost increases of fuel, food, and other products and services. Because consumer prices have decreased and the COLA is based on the Consumer Price Index published by the Bureau of Labor Statistics, the percentage is lower than it was the previous year.
Nevertheless, rising Medicare premiums will “absorb a disproportionate share of the COLA for most people,” according to Kathleen Romig, director of Social Security and Disability Policy at the Center on Budget and Policy Priorities. The expected monthly increase in standard premiums is 6%, or around $9.90. The Centers for Medicare and Medicaid Services states that income-related monthly adjustment amounts mean that those with greater incomes will pay even more.
“The majority of people will still receive higher benefit checks overall, but seniors and people with disabilities tend to spend a larger share of their incomes on health care, and medical prices are rising faster than overall inflation,” the speaker stated.
SSI Income Limits: What’s the income limit for Social Security?
How is Social Security administered?
More than 71 million people, including low-income people with impairments, receive payments from the Social Security program each year, totaling around $1.4 trillion.
In a nutshell, taxes provide funding for Social Security. The government pays benefits to disabled individuals, retirees, survivors of deceased workers, and recipients’ dependents through taxes from working people.
Payroll taxes, which are gathered from both employees’ employers and their own, fund Social Security. In 2023, the maximum earnings that were due to payroll taxes from Social Security were $160,200, an increase from $147,000 in 2022.
Any money left over after paying existing beneficiaries is transferred to the Social Security trust fund. The trust’s assets and the its contributions made by working people help fund future payouts.
The government computes a percentage of your highest wages from your top 35 years of earnings, taking into account when you choose to begin receiving benefits, to decide how much of Security you’ll receive.
SSI Income Limits: What’s the income limit for Social Security?
How is the adjustment for the cost of living determined?2
COLA is calculated using the Bureau of Labor Statistics’ Consumer Price Index, but some people are pushing for an alternative index that measures food, healthcare, and prescription drug prices based on elderly consumers’ buying habits.
According to Mark Hamrick, Senior Economic Analyst at Bankrate, “Seniors tend to spend more on medical care in general, including some out-of-pocket expenses like prescription drug costs, that can be very significant.” Naturally, the cost of food, housing, and electricity is still high. The majority of individuals depend on those items.
What will the 2024 Social Security Cola be?
In 2024, the 3.2% benefit increase that millions of recipients received this year will be much smaller than the unprecedented increase this year and will be a reflection of declining consumer prices. Government projections indicate that the average beneficiary will experience a rise of roughly $54 per month.
According to the Social Security Administration, the maximum compensation for a retired worker who files a claim at full retirement age will increase from $3,627 per month in 2023 to $3,822 per month in 2024. All retired workers will receive an average payout of $1,907 in 2024, as opposed to $1,848 in 2023.
Is there a financial crisis facing the Social Security trust?
The fund’s future issues have long been anticipated, partly due to changes in the population. Payroll tax payments decrease when birth rates drop because fewer people are employed. More Baby Boomers are retiring and starting to get it in the interim.
As per the March release of the annual trustee’s report for Social Security and Medicare, the program’s trust fund will not be able to provide full payments starting in 2033. According to the research, the government will only be able to pay 77% of scheduled payments if the trust fund is exhausted.
“Considering the slight decline this year, the truth is that, should the administration neglect to address the shortfall, people would be facing a reduction of over 20 percent,” stated Hamrick. “The message is clear: Social Security cannot be touched. The answers grow less ideal the longer this issue remains unsolved.
