COLA and Social Security 2024

The cost-of-living adjustment (COLA) gets the headlines, but multiple aspects of Social Security change annually to reflect national trends in prices and wages, affecting the benefits paid to tens of millions of Americans and the taxes paid by nearly all U.S. workers. Here are some important ways Social Security will be different in 2024.

1. COLA benefit boost
Inflation cooled considerably in 2023, but consumer prices still went up, producing a 3.2 percent COLA for Social Security beneficiaries. That will raise the estimated average retirement benefit by $59 a month, from $1,848 to $1,907, starting in January, according to the Social Security Administration (SSA).

That’s a considerably lower bump than the 2023 COLA of 8.7 percent, which, fueled by red-hot inflation in 2022, was the largest adjustment in more than 40 years when it took effect in January 2023. But in historical terms the 2024 bump is still slightly higher than usual: Since the early ’90s, the COLA has averaged around 2.5 percent a year.

The maximum benefit for a worker who claims Social Security at full retirement age (FRA) in 2024 will be $3,822 a month, up from $3,627 in 2023. FRA is 66 years and 6 months for people born in 1957 and 66 and 8 months for those born in 1958; people born from July 2, 1957, through May 1, 1958, will reach it in 2024.

The COLA isn’t just for retirees. It increases monthly payments for all types of Social Security and for Supplemental Security Income (SSI), an SSA-administered benefit for very-low-income people who are age 65 and older or are largely unable to work due to blindness or other disability.

2. Medicare premium offset
If you are enrolled in Medicare, chances are you have premiums for Part B — the part of the federal health care program that covers doctor visits and other outpatient treatment — deducted directly from your Social Security payments. That means an increase in Medicare premiums can undercut your cost-of-living adjustment.

Beneficiaries got a rare respite from that offset effect in 2023, as the big COLA was accompanied by a drop in Medicare premiums. But the offset is back in 2024, with the standard monthly Part B rate rising from $164.90 to $174.70, shaving about $10 a month off the COLA gain.

JD Miller

About JD Miller

John D. Miller is the founder/owner of Home Care Partners, LLC, a Massachusetts business providing private duty, personalized in-home assistance and companion care services to those needing help in daily activities and household functions. Phone: (781) 378-2164 Email: [email protected] Website: https://homecarepartnersma.com
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