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If you are a retiree who depends on Social Security benefits for income, you will see some modifications in 2024.
You will get a benefit boost to regulate for inflation. But simply how much more money you see will depend upon the dimensions of your Medicare Part B premiums and any cash for taxes withheld out of your verify.
Here are 4 factors that will affect how much Social Security advantages you receive in the brand new yr.
1. You will get a 3.2% cost-of-living adjustment
Social Security advantages will go up 3.2% beginning in January as a consequence of an annual cost-of-living adjustment.
That will quantity to a rise of more than $50 per month on common for retirement advantages, in line with the Social Security Administration.
The enhance is much decrease than the 8.7% COLA that went into impact in 2023. That prompted a profit enhance of more than $140 per month on common, the Social Security Administration mentioned when that enhance was introduced.
The most profit for a retired employee who claims at full retirement age will go as much as $3,822 monthly in 2024, up from $3,627 monthly in 2023.
The common profit for all retired employees will be $1,907 in 2024, up from $1,848 in 2023, in line with the Social Security Administration.
2. Your Medicare Part B premiums will be larger
One issue that will affect precisely how much beneficiaries receive is their Medicare Part B premium, which is often deducted immediately from Social Security checks.
Medicare Part B serves as medical insurance coverage and covers physician and different supplier providers, outpatient care, dwelling well being care, sturdy medical gear and a few preventive providers.
Standard month-to-month premiums are slated to rise by $9.80 per month to $174.70 in 2024, from $164.90 monthly in 2023.
However, individuals with larger incomes will pay extra because of what is named income-related month-to-month adjustment quantities, or IRMAA.
You usually cannot have your Medicare Part B premiums adjusted, with one exception, in line with licensed monetary planner Tim Steffen, director of superior planning at monetary providers firm Baird.
“If one thing has materially modified in your scenario … you’ll be able to appeal your Medicare premium,” Steffen mentioned.
That applies to occasions which have brought about your income to go down since 2022, similar to a divorce, the demise of a partner, the lack of a pension or beginning retirement.
3. You could face an earnings check
If you declare Social Security between age 62 and your full retirement age, your advantages will be lowered for beginning early. If you additionally proceed to work, it’s possible you’ll be topic to what’s generally known as the retirement earnings test in case you earn over a sure threshold.
In 2024, the earnings exempt from the retirement earnings test will go as much as $22,320, from $21,240 in 2023. For each $2 in earnings above that restrict, $1 in advantages will be withheld.
The excellent news is these withheld advantages are utilized to your month-to-month advantages when you attain full retirement age.
Importantly, there’s a completely different earnings check threshold for the yr you flip full retirement age.
In 2024, this will go as much as $59,520 for the months earlier than you attain your full retirement age, in comparison with $56,520 in 2023. In the yr you flip full retirement age, $1 in advantages is withheld for each $3 in earnings above the restrict.
The earnings check is a crucial issue to think about when deciding whether or not to assert retirement advantages early, in line with Joe Elsasser, a CFP and president of Covisum, a supplier of Social Security claiming software program.
The new larger threshold — nearly $60,000 — for the yr you flip full retirement age additionally presents a possibility, he mentioned.
For instance, in case you flip full retirement age in July, it’s possible you’ll earn about $10,000 monthly previous to your birthday and never be topic to the earnings check in case you begin advantages Jan. 1, Elsasser mentioned.
4. You could pay taxes in your profit income
Social Security profit income could also be topic to federal taxes.
The charge at which that income is taxed is predicated on your combined income. That is calculated by including half your advantages along with your adjusted gross income and nontaxable curiosity.
You could pay taxes on as much as 50% of your advantages in case your mixed income is between $25,000 and $34,000 for particular person tax filers, or between $32,000 and $44,000 for {couples} who’re married and file collectively.
Up to 85% of your advantages could also be taxable in case your particular person mixed income is greater than $34,000 and also you file individually, or in case you’re married with greater than $44,000.
Notably, these thresholds do not change from yr to yr. However, as profit income will increase every year with COLA, extra of that turns into topic to taxes over time.
More beneficiaries could also be responsible for federal income taxes on their profit income this tax season as a result of 8.7% COLA for 2023, in line with analysis from The Senior Citizens League. The nonpartisan senior group is advocating for the tax thresholds to be up to date and yearly adjusted so seniors do not need to pay as much taxes on their profit income.
“Certainly, taxation has turn out to be a rising concern,” mentioned Mary Johnson, Social Security and Medicare coverage analyst at The Senior Citizens League.
To keep away from a giant invoice at tax time, retirees could opt to have money withheld from their month-to-month checks.
How will the three.2% Social Security cost-of-living adjustment for 2024 affect you? If you’d be keen to talk on the file for a narrative, e-mail lorie.konish@nbcuni.com.
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