Many seniors today look to Social Security as their primary source of retirement income. As such, many have been eagerly awaiting news of a 2024 cost-of-living adjustment, or COLA.
Last week, the Social Security Administration announced that 2024's COLA would be 3.2%. That takes the average monthly benefit of $1,848 up to $1,907 come January. But that doesn't tell the whole story.
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Many seniors won't see their full increase
In light of 2024's COLA, the average Social Security benefit is set to rise by $59 a month. But that won't hold true for Social Security beneficiaries who are also enrolled in Medicare.
Seniors who are signed up for both programs at the same time have their Medicare Part B premiums deducted from their Social Security benefits automatically. Meanwhile, the cost of Part B is rising from $164.90 in 2023 to $174.70 in 2024. That's roughly a $10 increase. So when we subtract that sum, the average monthly Social Security benefit for Medicare enrollees in 2024 might only be $1,897.
Of course, not all Social Security recipients are enrolled in Medicare. Medicare eligibility doesn't begin until age 65 (though seniors can enroll three months before the month of their 65th birthday). But Social Security eligibility begins at age 62.
Seniors who claim Social Security that early face a lifelong reduction in benefits. But for some, that hit is worth it to get their money sooner. As such, the aforementioned Medicare Part B premium hike won't apply to all Social Security recipients -- just some.
Making the most of your Social Security income
Even if a Medicare premium hike won't be impacting your Social Security benefits in 2024, if you're in line for the average monthly benefit of $1,907, you're only looking at about $22,884 of annual income. That's not an easy sum to live on. So if you're someone who doesn't have much in the way of savings, then it's important to do what you can to stretch your Social Security benefits to the fullest.
One thing you may want to consider is relocating to a more affordable part of the country. Your geographic location won't impact your Social Security income -- you'll get the same monthly benefit whether you live in an expensive state or one that's notably cheaper.
Some states do impose taxes on Social Security benefits. If yours does, moving to a state that doesn't might help your finances.
However, that said, many of the states that tax Social Security income also offer exemptions for lower earners. So if those benefits are your primary or sole source of income, then you may not be paying state taxes on them to begin with.
While it's a good thing that the average monthly Social Security benefit is rising in 2024, for many people, living on that income alone will mean grappling with a cash-strapped existence. In addition to relocating, it could pay to consider part-time work to supplement your Social Security income. You're allowed to work and collect Social Security at the same time, and once you've reached full retirement age, you won't have to worry about your wages impacting your monthly benefits.
