3.2% Cost-of-living Adjustment in 2024
The Social Security Administration recently announced a 3.2 percent cost-of-living adjustment (COLA) for 2024. While this is higher than its 2.6 percent average annual increase over the past two decades, it is down from an 8.75 percent increase in 2023, which marked the largest in 42 years. This increase is slated to affect 66 million program beneficiaries and amounts to an average increase of $50 per month beginning in January of 2024.
Social Security taxes will also be affected, increasing maximum taxable earnings from $160,200 to $168,600. Also of note is that the taxability of income threshold for Social Security has not changed since 1984, which is the first year payments were taxed. This means many beneficiaries may see their payments taxed for the first time as they cross that threshold due to the 8.7 percent increase in 2023 and the 3.2 percent adjustment in 2024.
Social Security is designed to replace only around one-third of our income at the point of retirement. It is important to pair those benefits with a well-allocated portfolio. AAF Wealth Management helps devise the right strategy now to ensure optimal peace-of-mind down the road.
If you have questions, please contact Andrew Hammond, CFP®, Wealth Advisor & Co-Managing Partner at 774.512.4143 or firstname.lastname@example.org—or your AAFCPAs Partner.