Right now there are many questions as to what the Social Security increase will look like for 2024.
Social Security COLA for 2024
Starting in January 2024 about 66 million folks receiving Social Security benefits will see a 3.20% increase. The cost of living increase (COLA) is calculated based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the 3rd quarter (of the last year a COLA was determined) to the 3rd quarter of the current year. Of course if there was no increase, then there will not be a COLA.
Cost of Living Increases for Social Security from 1975 -2024
While 3.2% might seem quite small compared to last year’s increase of 8.7% it is definitely not the lowest we have seen. In fact, there are several years starting in the 2000s that there was no COLA increase. Below you can see the Cost of Living Adjustments since 1975.
How Benefits Are Calculated
The Social Security Administration will compute your benefits by using your averaged indexed monthly earnings. The average is based on up to 35 years of a worker’s highest indexed earnings. Slated to receive Social Security benefits beginning in 2024? Read more on this, visit the Social Security website
Full Retirement Age for Social Security
Normal retirement age based upon the year of your birth will determine when you can receive full social security benefits. If you were born in 1937 or earlier, then your full retirement age is 65. Starting after year 1937 and up to year 1942 the full retirement age goes up by 2 month increments.
|Year of Birth||Full Retirement Age|
|1938||65 and 2 months|
|1939||65 and 4 months|
|1940||65 and 6 months|
|1941||65 and 8 months|
|1942||65 and 10 months|
Those folks born between 1943-1954 will have a full retirement age of 66. From years 1955-1959 the full retirement age of 66 will increase by 2 month increments. For those folks born in 1960 and later, the full retirement age is now age 67.
Can you still take benefits at age 62?
So can you still take Social Security benefits at age 62. The short answer is…Yes! Choosing this option will significantly reduce your monthly social security income. You might be wondering how much would the payments be reduced. Lets look at someone who was born in 1953. Today they would be 70 years old, but for this example we are going to say that they started drawing their social security benefits at age 62. Those folks born in 1953 have a full retirement age of 66. By this person taking their benefits just 4 years prior to full retirement benefit age, they would reduce a $1,000 monthly payment by 25%. This means instead of getting the full $1,000 they are only drawing $750 per month.
Assuming a life expectancy of age 80 (without any COLA increases) this individual would receive $180,000 of benefits in their lifetime. If they had waited to full retirement age of 66 then they would receive $240,000 of benefits over their lifetime.
Should I Delay Social Security Benefits?
So if you were born in 1958 you would be age 66 in 2024 and qualify for full Social Security benefits at age 66 and 8 months. So should you delay? Only you can answer that question based on your income needs. If you are at full retirement age, but do not need the additional income, then you can choose to delay. By delaying you will see a noticeable increase in your monthly payments from Social Security.
In this example, we are going to say that a male born in 1966 has decided to not take benefits at full retirement age of 66. Additionally we are going to say that from years 2023-2032 he earned $50,000 per year (while years prior were less, but increased at about 5% per year. The estimated monthly income for this individual at full retirement age of 66 would be right around $1,775. If he were to wait until age 70 then the monthly amount would increase to $2,258 which is a 27% increase.
Some folks would argue that it is a big gamble to delay past full retirement age because you could pass away earlier and not collect as much. This is true, so this is another factor that you must weigh before making a decision.
Many of our articles lean towards humor, but lacking funds to cover retirement expenses is no laughing matter. Not only should you be maximizing your social security benefits, but your retirement plan as well.
Your Social Security benefits in 2024 may very well be your primary source of income so it is important to make sure that you are paying the lowest amount per month for your health insurance while getting the benefits that you need.
Always remember, that our advisors help you compare rates and benefits to ensure you get exactly what you need. Give us a call at (800)924-4727 or complete one of our contact request forms below. You can choose between Medicare Supplement or Medicare Advantage. If you would like information on both types of plans in your area, then feel free to submit requests for both.