Social Security recipients are expected to receive a 3.2% raise for the year 2024, but will it be enough to combat inflation? Housing and food costs have increased significantly, and Medicare Part B premiums may also rise.
Social Security recipients are expected to receive a 3.2% raise for the year 2024. While this adjustment is above average, it may not be enough to combat the persistent issue of inflation.
The Social Security Administration will announce the precise increase on Thursday morning. This adjustment affects approximately 67 million Social Security recipients, including 52 million individuals receiving retirement benefits. The annual cost-of-living adjustment is determined by comparing the average inflation for the third quarter of the current year with that of the prior year. According to calculations from the Senior Citizens League, a nonpartisan advocacy group, the projected increase for 2024 is 3.2%.
Housing costs have experienced substantial increases over the past year, with shelter costs rising by 7.3% and food costs increasing by 4.3%, according to the Bureau of Labor Statistics. In a recent poll conducted by the Senior Citizens League, over two-thirds of respondents reported that their household expenses remained at least 10% higher compared to one year ago.
An expected increase to Medicare Part B premiums in 2024 will impact the modest raise in Social Security benefits. Most beneficiaries have their Part B premiums deducted from their Social Security checks. The Centers for Medicare and Medicaid Services (CMS) is set to announce the Part B premium for 2024 later this fall. According to projections by the Senior Citizens League, the standard Part B premium for 2024 could rise to about $179.80 per month, compared to this year's $164.90.
In addition to the increase in premiums, taxes can further diminish retirees' benefits. If your combined income exceeds $25,000 as an individual or $32,000 as a couple filing a joint tax return, you will have to pay federal income taxes on a portion of your Social Security benefits. These income thresholds have not been adjusted for inflation since their implementation in 1984.
Last year, a significant number of people had to pay taxes on a portion of their benefits for the first time. According to a poll conducted by the Senior Citizens League, as many as 26% of respondents who had been receiving Social Security for more than three years reported paying taxes on their benefits for the first time on their 2022 tax return. With this year's substantial COLA (Cost-of-Living Adjustment), even more beneficiaries may find themselves in taxable territory for the year 2023.
If you are at least 62 years old, you can benefit from the annual COLA even if you are not yet receiving Social Security. The COLA is applied to your Primary Insurance Amount (PIA) starting the year you turn 62. The PIA is the amount you would receive if you claimed at your full retirement age, which is 67 for those born in 1960 or later. In other words, you do not need to claim earlier than your planned retirement age to receive an above-average raise.
All Rights Reserved © 2024
Leave Comment