Social Security Recipients to See 3.2% Increase in Benefits in 2024
Social Security recipients are facing potential changes in 2024, which would impact monthly benefits and potential tax obligations due to inflation and adjustments. The program offers payments to more than 70 million individuals, including retirees and children, helping to keep many Americans from falling into poverty. These benefits are raised annually to adjust to inflation, with benefits set to rise by 3.2% in 2024.
Other changes due to cost-of-living adjustments in 2024 may increase not only recipients’ monthly income but also subject more of their earnings to taxes. This is a common misconception about Social Security, which leads many beneficiaries to mistakenly believe their checks are tax-free. According to some experts, this misunderstanding could be problematic, potentially leading to seniors not saving enough for their retirement.
Set to take effect in 2024, the Social Security Administration has stated that the top benefit will reach nearly $5,000 a month, marking an increase of 3.2%, although it’s a smaller boost compared to previous years. The average benefit will also see an increase, expected to go up to $1,907 per month, benefiting millions of Americans. While only a small percentage of people receive the maximum Social Security payout, those who do will see a significant increase in their monthly earnings.
Furthermore, more Social Security beneficiaries could pay higher taxes due to a quirk in the system. Currently, federal income taxes must be paid on benefits if an individual earns above a particular threshold, which hasn’t changed since 1984. Therefore, more seniors are subject to taxes on their retirement income annually because of COLA increases and additional sources of income.
For these reasons and more, Social Security recipients should expect to see changes in 2024, indicating potential higher taxes for workers and beneficiaries. These changes suggest a need for seniors to reevaluate their financial planning to ensure they have enough savings for their retirement.
