Hey there! Let’s get right into what’s happening with Social Security in 2024. Buckle up because some of these changes might just catch you off guard.
Annual Social Security Adjustments: More than Just Numbers
Every year, the Social Security program gets a bit of a tweak. Why? To make sure our benefits are in step with inflation and wages. So, come October, expect a press release from the Social Security Administration that dives into the nitty-gritty of these changes. But here’s a heads up: many of us might be taken by surprise.
Nationwide Retirement Institute’s Big Reveal
Wondering how we know folks might be in for a surprise? Well, the Nationwide Retirement Institute did a survey and found that loads of Americans might be caught off their game. They spoke to 1,806 adults spanning four generations, and the results were, well… interesting, to say the least. Especially when considering just how vital Social Security is for many when they hang up their work boots.
- Inflation Myths Busted! First off, let’s debunk a myth: Social Security does battle against inflation. Surprisingly, 70% of the people surveyed thought it didn’t. But guess what? It does, thanks to the annual cost-of-living adjustment (COLA).
- Breaking Down the COLA With rising prices for just about everything, from bread to milk, there’s a saving grace called COLA. This cost-of-living adjustment ensures that Social Security payments don’t lose their punch. No one wants their benefits to buy less and less each year. Good news on the horizon: Mary Johnson from The Senior Citizens League (and some other smart folks) predict a 3% COLA for next year.
- Let’s Talk Dollars and Cents So, what’s a 3% COLA in real terms? If you’re receiving the average monthly retired-worker benefit of $1,838.58 (as of July 2023), it means you’d be getting an extra $55.16 every month in 2024. That’s a sweet $661.92 for the year! Just keep your eyes peeled for the official announcement around mid-October after we get the latest from the Labor Department.
- H3: More Earnings, More Taxes: Another curveball in 2024: the maximum taxable earnings limit is going up. In simple terms? If you’re earning big bucks, you’ll be paying payroll taxes on a bit more of your income next year.
Why Should You Care?
Even if these changes don’t affect your paycheck directly, it’s crucial to be in the loop. After all, Social Security plays a significant role in the financial well-being of countless Americans, whether they’re just starting their career or enjoying their golden years.
Conclusion: Stay Informed, Stay Ahead Alright, folks! That wraps up the lowdown on the “2 Major Social Security Changes Coming in 2024 That May Surprise Most Americans.” Knowledge is power, right? By staying informed, we can plan better, react smarter, and make sure we’re getting the most out of our Social Security benefits. So, keep an ear to the ground and an eye on your mailbox come October. Who knows? You might be one of the few not surprised by these changes!
Social Security Taxes
Looks like there’s some misunderstanding about Social Security taxes! You’d think it’d be simple, but nah. Almost 3 out of 4 people thought all their income gets hit with Social Security taxes. But surprise! Only up to a certain amount of your income is taxed for Social Security.
Check this out: In 2023, only the first $160,200 of your earnings is subject to Social Security tax. Yup, if you’re making more than that, the excess isn’t taxed (for Social Security purposes, at least). But this cap changes every year, usually going up. Here’s a quick peek at the past few years:
- 2019: $132,900
- 2020: $137,700
- 2021: $142,800
- 2022: $147,000
- 2023: $160,200
(Thanks, Social Security Administration, for the deets! ✌️)
Rumor has it that in 2024, the cap’s gonna be around $167,700. So, if that’s right, some folks will be taxed on an extra $7,500 of their income next year. Quick math: if you’re making over the limit, that’s like $465 more in taxes (at 6.2%). But if you’re rocking your own business (go you! ), you’re gonna feel it a bit more since you’ll be paying 12.4%, so around $930 more.
Anyway, we’ll have to wait for the official word from the SSA in October. Keep your eyes peeled for that update!