The 2024 Cost-of-Living Adjustment
The Social Security Administration announced the 2024 cost-of-living adjustment will be 3.2%. This is down significantly from the 5.9% increase for 2022 and 8.7% increase for 2023.
How Does the New Social Security COLA Effect Your Retirement Benefits
Retirees receiving Social Security Retirement Benefits will receive this COLA increase effective for their December benefit. Updated benefits will be payable in January. The link to the Social Security Administration’s Press Release is here (https://www.ssa.gov/cola/).
Does COAL Change Your Medicare & Medicaid?
The Centers for Medicare and Medicaid Services (CMS) has not yet officially announced the expected increase in Medicare Part B premiums. They are expected to do so later this fall. In its annual report released earlier this year, the Medicare Board of Trustees estimated the Medicare Part B premium for 2024 could be $174.80. The link to the full Medicare Board of Trustees Annual 2023 Report is here (https://www.cms.gov/oact/tr/2023).
Medicare Part B premiums are withdrawn from retirees monthly Social Security Retirement Benefit payments. This is done before the payment is delivered to their accounts. For many retirees, this projected increase in Medicare Part B premiums will decrease. However, it may not fully offset the recently announced COLA increase by the Social Security Administration. Most retirees should see a net increase in the monthly deposit even after taking out the projected increase in Medicare Part B premiums.
The Bottom Line about Social Security COLA Changes for 2024
There is good news. This 3.2% COLA for Social Security will result in higher monthly deposits for retirees. Those of us developing tax projections for 2024 can help. We need to include this increase in expected Social Security Retirement Benefits. This will improve the accuracy of the estimates for 2024.
This increase is not nearly as significant as what we saw in 2023. I do however, expect to see scenarios where this relatively minor increase has an effect on households already up against other tax-related limits.
Also, there is ongoing debate about if the inflation measurement used by the Social Security Administration tracks actual retiree expenses. As, for many retirees, the higher costs they personally experienced this past year likely “feels” like it was more than a 3.2% jump.
If ongoing tax planning and staying on top of changes to your retirement income aren’t already an integral part of your retirement plan, click here to schedule a time to talk.