MINNEAPOLIS — Good news for folks on Social Security, chances are your monthly checks are about to get bigger in the new year.
Every year, the Social Security Administration announces a Cost of Living Adjustment, commonly called a COLA.
This year the COLA is going to be 3.2%.
The Social Security Administration says the 2024 COLA will increase the average monthly payment by more than $50 a month
The AARP is estimating the average recipient will see a monthly increase of $59 a month, with the average retired worker in the U.S. receiving a $1,848 monthly Social Security payment in 2023, compared to a $1,907 monthly payment in 2024.
This adjustment may be lower than what some people were expecting.
In 2023, the COLA was 8.7%, which is more than double the COLA of 2024.
The 2022 COLA of 5.9% was also higher than average.
However, a 3.2% COLA this in 2024 is actually closer to average when you look at the COLA’s over the last 20 to 30 years.
On the flip side, some workers may have to pay more in the new year.
The Social Security Administration says most workers pay a 12.4% tax to help fund Social Security.
For employed workers, the employee covers half of that tax, and the employer covers the other half.
Self-employed individuals must pay the full 12.4% on their own.
That tax rate isn't going to change in the new year, it hasn't changed since the 90s.
What is changing is the amount of money that can be taxed.
According to the Social Security Administration, in 2023, every dollar a person earns, up to $160,200 is subject to this Social Security tax.
The new limit for 2024 is set at $168,600 which is an increase of $8,400.
So, higher earners will have to pay more money to fund Social Security in the new year.
The Social Security Administration says this change will be reflected in your January Social Security check.
If you want to see how this change will affect you or a family member click here to check out a Social Security payment calculator created by the AARP.
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