News You Can Use

2024 Social Security COLA Set at 3.2% and What It Means

The recently announced increase in the Social Security cost-of-living adjustment (COLA) for 2024 is much more modest than the one announced just a year ago. But milder or not, it has meaning. So what does it mean?

• The more modest increase reflects a slowing of inflation.
• The rates and limits for qualified retirement plans will most likely be modest increases. 
• The 3.2% COLA, which takes effect in January 2024, means the current average Social Security benefit of $1,790 will increase by about $57.30 per month starting in January. That’s significantly less than the $144 raise the average Social Security beneficiary received for 2023 after this year’s 8.7% COLA.
• Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $168,600 from $160,200.
• It is clear that retirement savers can’t simply rely on Social Security to fund a comfortable, secure retirement. The importance of qualified retirement plans plays in the workplace is growing and more important to filling the gap. According to a recent study conducted by Bank of America, 76% of employees and a whopping 96% of employers contend that employers are responsible for employee financial wellness.