It's natural to grow reliant on the monthly benefit you receive from Social Security, especially if you're someone without a ton of money in savings. But the amount of money you collect from Social Security can change from one year to the next. And these three factors could influence what your benefits look like in 2024.
1. Your cost-of-living adjustment
Each year, Social Security benefits are subject to a cost-of-living adjustment (COLA). COLAs are based on inflation, and as you may have noticed, living costs have been cooling to some degree.
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Because of this, your 2024 COLA won't be as high as the raise you got in 2023. Last year, Social Security benefits increased 8.7% at the start of the year. This year, they're only going up 3.2%. However, that might still give you a bit of extra buying power.
2. Your earnings from a job
It's not against the rules to collect Social Security if you're still working. And once you reach full retirement age (FRA), which is the age at which you're entitled to your monthly Social Security benefit in full based on your personal wage history, you can earn any amount of income from a job without risking having any benefits withheld.
However, if you're working and collecting Social Security now and have not gotten to FRA yet, you'll be subject to an earnings-test limit. And exceeding that limit could mean having some of your Social Security income withheld until your FRA arrives.
Here's how it works. Let's say your FRA is 67 and you're currently 65. In that case, you can earn $22,320 this year without having benefits withheld. Beyond that point, you'll have $1 in Social Security withheld per $2 of earnings.
Now let's imagine you were reaching FRA at some point in 2024. In that case, you'd have a higher earnings-test limit -- $59,520. And the rules of withheld benefits would skew slightly more in your favor, with $1 in Social Security getting withheld per $3 of earnings instead of $2.
Either way, depending on your age and income, the amount of money you receive from Social Security this year could be different than what you expect it to be. If you don't want to risk having benefits withheld, make sure to keep your income below the aforementioned thresholds.
3. Your Medicare costs
Seniors who are enrolled in Medicare and Social Security at the same time have their Part B premiums deducted from their benefits automatically. Because of the cost of Medicare is rising this year, you may not get your full Social Security COLA.
Last year, the standard Medicare Part B premium was $164.90 a month. This year, it's gone up to $174.70. And unfortunately, that extra money is going to come out of your Social Security benefits.
Know what to expect
If Social Security is a key income source for you, then it's important to understand the factors that could cause your benefits to change for better or worse. Keep all of these items in mind so you can budget accordingly for 2024.
