Recently, the Social Security Administration (“SSA”) announced several changes to Social Security starting in 2024. These changes impact both expected benefits as well as certain tax considerations. Below is a high-level overview of some of the expected changes.
Cost-of-Living Adjustment (“COLA”):
Those individuals receiving Social Security and Supplemental Security Income (“SSI”) benefits can generally expect a COLA, which is based on the consumer price index (“CPI”). Starting in 2024, the COLA will be 3.2%. This is a 63% decline compared to the COLA in 2023:
The chart below reflects the estimated average monthly Social Security benefits for various individuals before and after the COLA adjustment:
Maximum Social Security Benefit for Worker Retiring at Full Retirement Age:
Full retirement age is the age at which an individual is eligible to receive Social Security retirement benefits at an unreduced rate. An individual’s full retirement age is dependent on when he or she was born. For example, for those individuals who were born in 1960 or later, full retirement age is 67. Starting in 2024, the maximum Social Security benefit for an individual retiring at full retirement age is $3,822/month—a more than 5% increase from 2023:
Retirement Earnings Exempt Amounts:
Retirees and beneficiaries may earn income in addition to their Social Security benefits. However, once these earnings reach certain income thresholds, overall Social Security benefits can be reduced. If an individual has reached full retirement age, benefits are reduced by $1.00 for every $3.00 over the income threshold. However, if an individual is younger than his or her full retirement age, benefits are reduced by $1.00 for every $2.00 over the income threshold. In 2024, the income thresholds will increase as follows:
For a complete review of the SSA’s 2024 Social Security Changes, click here.
The SSA’s recent announcement of Social Security changes in 2024 brings some clarity to retirees and beneficiaries. Retirees can generally expect an increase in overall benefits provided that additional earnings are not above the thresholds listed above. More importantly, current and expected Social Security benefits should factor into your overall financial plan and tax strategy.
At Provident Financial Planning, our JD, CPA, CFP® team is here to guide you through your Social Security benefits. Schedule an appointment with us today over Zoom or in any of our offices in Southlake, Plano, Dallas, Houston, or Atlanta. Our team can help you implement a financial strategy tailored to you.
Keywords: Social Security, benefits, retirement, financial plan, income, taxes, strategy
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