After the biggest Social Security increase in more than 40 years, we’ve got another increase coming, starting January 2024 — although it’s not quite as big as the one we saw this year.
If you’re one of 66 million Americans who counts on a monthly security check, then the Oct. 12, 2023, Social Security Administration announcement will bring relief. In the midst of inflation and rising costs, the government will increase your monthly Social Security checks by 3.2%.
So how much money can people expect from their Social Security checks? Will you pay more taxes with this increase in Social Security benefits? Will Medicare costs affect your increase? When can you expect your Social Security checks to go up? We have the answers on the Social Security increase.
Why is there a Social Security benefits increase?
Every year the government calculates the cost of living to determine how much to increase Social Security benefits. According to the Consumer Price Index (CPI), the cost of living has gone up 3.7% between August 2022 and August 2023, which is quite a bit lower from the 9% increase a year ago.
But still, the government is only raising the Cost-of-Living Adjustment for Social Security checks by 3.2% in 2024.
By comparison, the the cost of living only rose 1.4% between 2020 and 2021. Seniors haven’t been able to keep up with rising costs, and according to the Senior Citizens League, they have lost 44% of their buying power in the past 22 years. Social Security tries to lessen the impact by raising benefit payouts.
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How much will Social Security benefits go up?
The Social Security payouts will rise by 3.2% in January 2024, a big dip from the 8.7% increase in 2023. That might feel small compared to 8.7%, but it’s all tied to inflation. If the increase is smaller, it also means prices aren’t rising as fast, which of course is a good thing.
So how much more can you expect on your next Social Security check with a 3.2% COLA increase?
Since the average monthly Social Security check in 2023 is $1,705.79 (as of August), checks would increase by a little over $54 per month. With a 3% increase, it would make your check $1,760.38.
To calculate how much you would get each month with an 3.2% increase, take the gross Social Security check amount and multiply it by 1.032. For instance, if you get a $1,200 Social Security benefit monthly, your new total would be between $1,238.40.
When will the 2024 Social Security increase happen?
Social Security recipients see their pay increase reflected starting with their January checks. This year, the same will happen. The COLA increase goes into effect with the December 2023 benefits, but those checks will get sent out in January 2024.
January 2024 checks are sent out on a schedule based on your birthday. Here’s when you can expect your check:
- Birthdays that fall from 1 -10 will get their Social Security increase on their Jan. 10 check
- Birthdays that fall from 11 – 20 will get their Social Security increase on their Jan. 17 check
- Birthdays that fall from 21 – 31 will get their Social Security increase on their Jan. 24 check
Will you have to pay more taxes on your Social Security checks?
Yes. If your annual income — which includes Social Security benefits — is over the annual income minimum, you’ll have to pay taxes. If you’re single and your income is over $25,000 or married and your income is over $32,000, your benefits will get taxed up to 50%. If you’re single and make over $34,000 or married and your income is over $44,000, then you’ll get taxed up to 85%.
Even with an increased cost of living, this threshold stays the same. So if you get more Social Security money in 2024, then there’s a higher chance your benefits will get taxed.
Will Medicare costs reduce the 2024 Social Security increase?
Medicare costs will reduce your monthly Social Security check if you’re a senior. And although the cost of Medicare Part B dropped in 2023, experts predict it’s going to go back up in 2024 (although that hasn’t been announced yet). The cost might change from $164.90 each month to about $174.80 each month. That’s almost a $10/month jump!
So, you got a 3.2% Social Security check increase. But at the same time, if the Medicare Part B premium goes up by $10, that eats into the raise. So, for some seniors, even if their Social Security check goes up, the actual amount they get might not feel a lot bigger because of the Medicare costs.
About 90% of Americans who get Medicare have the standard premium costs taken out of their Social Security Check. Most have the Medicare Part B Plan which covers doctor visits and outpatient care. In 2022, premiums went up by 14.5%, which sucked $170.10 from Social Security checks. But in 2023, standard premium rates for Medicare’s Part B plan dropped 3%, shaving off $5.20 from the monthly deduction.