The Social Security cost-of-living adjustment for 2023 was the largest in decades. But how will this year’s COLA stack up?
How big is the 2024 Social Security increase in light of inflation, really, and what will it affect? More importantly, when can you get it?
Keep reading for all those answers and more. Here’s what you need to know about the Social Security cost-of-living adjustment (COLA) for 2024.
1. The amount of your Social Security increase
The 2024 COLA increase won’t be as dramatic as the one for 2023, when Social Security benefits jumped at the fastest rate since the early 1980s.
The 3.2% increase for 2024 works out to an estimated $50 more per month for retired workers, on average.
More is better, no doubt — but you might be wondering whether this modest increase is cause for much celebration.
2. Your benefit isn’t as big as it seems to begin with
Many Social Security recipients have their Medicare Part B premiums withheld from their benefit payments. (Part B covers doctor visits and other outpatient services.)
So those folks never receive their full Social Security benefit amount each month, but rather what’s leftover after their Part B premium is taken out. For 2024, people on Medicare will pay $174.70 per month for the premium.
That’s an increase of $9.80 per month coming straight off the top of the bump in your Social Security. We detail the rest in “Almost Every Medicare Premium and Deductible Just Jumped.”
3. Your COLA could increase your tax bill
The COLA will increase retirees’ Social Security income. That extra income could in turn cause some retirees to owe more taxes on the benefits they receive in 2024 than those they received in 2023.
It could also cause some people who aren’t currently taxed on their Social Security income to owe Uncle Sam a portion of the benefits they receive in 2024.
We explain the math in “How the New Social Security COLA Will Cost Some Retirees,” but the gist is this: About half of retirees owe taxes on up to 85% of their Social Security benefits, which effectively means they owe a piece of their COLA to Uncle Sam.
You can mitigate this issue by filing a Form W-4V with the Social Security Administration. This won’t change whether you’re taxed on your benefits; instead, it allows you to have taxes withheld from your benefits so you don’t get blindsided later by a big tax bill or a penalty for not making tax payments throughout the year.
4. When you will start receiving your COLA
You’ll start receiving your new benefit amount in January, according to the SSA. The exact date your benefits are sent typically depends on your birthday:
- If your birthday falls on days 1 through 10: You receive your payments on the second Wednesday of each month, meaning you will receive your first payment with the 2024 COLA on Jan. 10.
- If your birthday falls on days 11 through 20: You receive your payments on the third Wednesday of each month, meaning you will receive your first payment with the 2024 COLA on Jan. 17.
- If your birthday falls on days 21 through 31: You receive your payments on the fourth Wednesday of each month, meaning you will receive your first payment with the 2024 COLA on Jan. 24.
These dates are a rule of thumb, though. There are exceptions, as we note in “Your Social Security Payment Gets Bigger on This Date.”