One of the most eagerly anticipated pieces of information for Social Security Disability Insurance (SSDI) beneficiaries is the annual cost-of-living adjustment (COLA). The Social Security Administration (SSA) adjusts benefits to keep pace with inflation and the rising costs of living. For those who depend on Social Security benefits, knowing how much the increase will be is very important.
Social Security and Supplemental Security Income (SSI) benefits will increase by 3.2 percent in 2024. The 3.2% COLA will begin with benefits payable to more than 66 million Social Security beneficiaries in January 2024. Increased payments to approximately 7.5 million SSI recipients will begin on December 29, 2023.
In this article, we’ll delve into what beneficiaries can expect from the SSDI benefits increase in 2024.
The Social Security Administration regularly updates its benefits programs, including Social Security Disability Insurance (SSDI) and Supplemental Security Income, to account for economic changes in the cost of living. As we enter 2024, it’s important to learn about the latest developments in SSDI benefits.
Cost-of-Living Adjustment (COLA) Increase
In 2023, SSDI beneficiaries witnessed the most significant COLA increase in over four decades, with an 8.7% raise. The COLA adjustments are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to ensure that benefits keep pace with inflation. For 2024, SSDI and SSI beneficiaries will receive a 3.2 percent COLA increase in their benefits.
The COLA’s main goal is to make sure that the buying power of Social Security and Supplemental Security Income benefits doesn’t get weaker due to inflation. It depends on how much the Consumer Price Index for Urban Wage Earners and Clerical Workers goes up from the third quarter of the year when the last COLA was set to the third quarter of the current year. If there’s no increase in the CPI-W, then there won’t be a COLA.
Maximum Taxable Earnings Going Up
In 2023, the most money that workers had to pay Social Security taxes on was $160,200. In other words, if you earned more than that, you didn’t have to pay Social Security tax on any amount of money you made over that. Usually, this tax rate is about 6.2%. But in 2024, the maximum earnings that you’ll have to pay taxes on will go up to $168,600. This means that a larger part of a worker’s income will be taxed. The reason for this change is because average wages in the U.S. have gone up.
Increase to Maximum Social Security Benefits
As anticipated, because of the changes expected in 2024, the highest Social Security benefit you can get when you retire at full retirement age will also go up in 2024. It’s increasing from $3,627 to $3,822. It’s worth mentioning that this highest amount is for people who retire at the full retirement age, which is 67 for anyone born after 1960.
However, if you retire before reaching the full retirement age, your maximum benefits will be less because benefits are reduced in that case. The same goes for those who retire after reaching full retirement age. In some cases, waiting to retire after your full retirement age can help you get a bigger benefit check.
Increase in Spousal Benefits
In 2024, the average Social Security benefits will go up for various groups of people, including widows, widowers, and those with disabilities. Here’s a breakdown of those changes:
- The typical widowed mother raising two children will see her benefits increase from $3,540 to $3,653.
- Elderly widows and widowers who live on their own will experience a boost in their benefits, going from $1,718 to $1,773.
- Disabled workers supporting a spouse and one or more children will have their benefits increase from $2,636 to $2,720.
Keep in mind that these figures represent averages, and depending on your circumstances, they may lead to different benefit amounts.
Adjustment to Exempt Amounts Under The Earnings Test
If you decide to start receiving your Social Security retirement benefits before being eligible for the full amount, the government may take away some of it if you earn a lot from work. They have these numbers called “retirement earnings test exempt amounts,” and if you earn more than those, they can reduce your Social Security checks. The SSA has announced changes to the exempt amounts for 2024.
Here’s how it will work for 2024: If you start getting Social Security early, you can make up to $1,860 per month ($22,320 per year) without SSA taking anything away. But for every extra $2 you earn over this amount, they’ll take $1 from your benefits. In 2023, the most you could earn without a reduction was $1,770 per month ($21,240 per year).
Now, when you’re about to reach the age where you can get your full Social Security, the rule still applies, but it’s more forgiving. In 2024, you can make up to $4,960 per month ($59,520 per year) without a reduction in your benefits. For every extra $3 you earn over this limit, they’ll take away $1 from your benefits instead of $2 like before. In 2023, the limit was $4,710 per month ($56,520 per year).
Increase to Medicare Part B Premiums
Although Social Security and Medicare are separate programs, some people receiving Social Security benefits are enrolled in both, and many have their Medicare Part B premium taken directly from their Social Security payments.
Starting in 2024, the monthly premium for Medicare Part B will increase from $164.90 in 2023 to $174.70. Additionally, the annual deductible for Part B is going up next year, from $226 in 2023 to $240 in 2024, which is a $14 increase.
In conclusion, 2024 brings several significant changes to Social Security benefits, building upon the substantial updates made in 2023. While the application process remains the same, it’s still advisable that, given the complexities of the system, you stay informed and check your SSA account to ensure your benefits are up to date.
