With the new year, there are plenty of new statistics about Social Security, the biggest program in the federal government.
From the annual cost of living adjustment (COLA) to changes in taxable maximums and maximum benefits, Medicare premiums, and the number of states that still tax Social Security benefits, the numbers are changing. Here’s a quick rundown of some key Social Security metrics.
2024 COLA Increase
More than 71 million Americans are seeing a 3.2% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2024. On average, Social Security retirement benefits are increasing by $59 per month starting in January.
It’s the third year in a row inflation has prompted an increase in benefit payments, following the historic 8.7% increase in 2023 and a 5.9% increase in 2022. The average COLA increase over the past 20 years is 2.6%.
The CPI Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to calculate the annual adjustment. CPI-W changes for the months of July, August and September are added together and averaged, then compared with the Q3 average from the prior year. The percentage difference is the amount of the next year’s COLA.
Source: Social Security Administration
After the 3.2% COLA, the new 2024 estimated average monthly Social Security benefits as of January 2024 are:
• Retired worker: $1,907
• Married couple, both receiving benefits: $3,033
• Survivor benefit, older spouse: $1,773
• Survivor benefits, widowed parent and two qualifying children: $3,653
• Worker receiving disability benefits: $1,537
Source: AARP
Taxable Maximum
The maximum amount of earnings subject to the Social Security tax (taxable maximum) has increased to $168,600 for 2024, up from $160,200 in 2023. This means that high-earning employees could see their withholding rise by $520.80, for a total of $10,453.20.
The earnings limit for workers who are younger than “full” retirement age (see Full Retirement Age Chart) increased to $22,320. (Social Security deducts $1 from benefits for each $2 earned over $22,320.)
The earnings limit for people reaching their “full” retirement age in 2024 increased to $59,520. (Social Security deducts $1 from benefits for each $3 earned over $59,520 until the month the worker turns “full” retirement age.)
Source: Social Security Administration
Maximum Benefits
Those who retire in 2024 and qualify for the maximum benefit will receive more in their monthly Social Security than their peers who retired in 2023. Those claiming at age 62 in 2024 have a maximum benefit of $2,710, up $56 from 2023’s maximum.
Some gains will be a lot bigger, though. The maximum Social Security benefit for those retiring at age 70 in 2024 will jump $318 to $4,873. That figure is up by nearly $1,000 in just the past three years, showing just how extreme inflation has been during that span of time.
Source: The Motley Fool
The maximum Social Security benefit for a worker retiring at full retirement age will rise to $3,822 in 2024 from $3,627 in 2023. This affects only those who claim benefits at FRA, which is currently either 66 or 67, depending on your birth year. Those who claim benefits earlier receive smaller monthly payments.
Source: GOBankingRates
The standard monthly premium for Medicare Part B enrollees is $174.70 for 2024, an increase of $9.80 from $164.90 in 2023, as announced last October by the Centers for Medicare & Medicaid Services. The annual deductible for all Medicare Part B beneficiaries is $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023.
The increase in the 2024 Part B standard premium and deductible is mainly due to projected increases in health care spending and, to a lesser degree, the remedy for the 340B-acquired drug payment policy for the 2018-2022 period under the Hospital Outpatient Prospective Payment System.
Medicare Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. Each year, the Medicare Part B premium, deductible, and coinsurance rates are determined according to provisions of the Social Security Act. Premiums for Part B are deducted directly from Social Security payments.
Source: CMS.gov
Scope of the program
The program pays roughly $1.4 trillion in benefits to more than 71 million people each year, including low-income individuals with disabilities. Nearly nine out of 10 people age 65 and older were receiving a Social Security benefit as of June 30, 2023.
Social Security is the biggest government program in the United States. In 2023 OASI and DI benefits accounted for 22.1% of federal spending.
“Social Security is the most far-reaching and important act of social and economic justice that the people of the United States have ever enacted,” said newly sworn in Social Security Commissioner Martin J. O’Malley. “For tens of millions of Americans across our country, Social Security is the difference between living with dignity or living in poverty.”
Source: Social Security Administration and USGovernmentSpending.com
As of Jan. 1, 2024, the number of states taxing Social Security benefits dropped into the single digits, with Missouri and Nebraska dropping from the ranks this year.
Just nine states still levy a Social Security tax—each with its own unique way of doing so. The other 41 states and the District of Columbia do not tax Social Security benefits.
The nine states still taxing Social Security to at least some extent are: Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.
Source: 401(k) Specialist
SEE ALSO:
• 9 States Still Taxing Social Security Benefits in 2024
• It’s Official: 2024 Social Security COLA Set at 3.2%
• Social Security Taxes vs. Benefits: Americans Take Far More Out Than They Pay In
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.