The holiday season is typically filled with gifts, cheer, and plenty of surprises. For retirees, this year, there’s a particularly special gift coming from the Social Security Administration.
As part of the annual Social Security cost-of-living adjustment (COLA), retirees will receive an increase in their benefits, and for many, that could mean a substantial check hitting their bank accounts. For some, that check could be as high as $4,873—just in time for Christmas.
This December, many Social Security recipients will receive a higher monthly check, thanks to the COLA adjustment, which is designed to keep up with inflation and the rising cost of living. Here’s everything you need to know about this much-needed financial boost.
The $4,873 Social Security Check: Who Gets It?
The $4,873 check is the highest possible amount that a retiree could receive, but not everyone will get that amount. The size of your Social Security check depends on several factors, including your lifetime earnings and when you start claiming your benefits.
- Average Social Security Payment: The average Social Security payment for a retired worker in 2023 is about $1,800 per month, according to the Social Security Administration. However, this amount varies based on how much you earned during your career and the age at which you begin receiving benefits.
- Maximum Social Security Benefit: The maximum monthly Social Security benefit a retiree can receive in 2023 is $4,555 if they begin taking benefits at their full retirement age (FRA). For those who delay claiming until age 70, that number can increase to $4,873 per month. This is the highest amount available, but it requires years of high earnings and waiting to claim benefits until the age of 70.
What’s Behind the $4,873 Check?
The COLA increase is determined by the annual inflation rate, which is measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
In 2023, due to rising inflation, the Social Security Administration announced a COLA adjustment of 8.7% for 2024—one of the largest adjustments in recent history. This increase is meant to help beneficiaries keep up with the higher costs of goods and services, such as food, housing, and healthcare, which have surged over the past year.
For retirees who have been relying on a fixed income, this adjustment is a welcomed relief. The COLA increase means more money in the bank, which can help alleviate some of the financial strain caused by inflation.
When Will the Checks Arrive?
The Social Security Administration typically begins processing COLA increases in December. If you’re already receiving Social Security benefits, you may notice the increased amount reflected in your bank account as early as December 2024. Depending on your birth date, your Social Security check may arrive earlier or later in the month.
Here’s a general breakdown of the Social Security payment schedule:
- If your birthday falls between the 1st and 10th of the month, your payment will be made on the second Wednesday of the month.
- If your birthday falls between the 11th and 20th of the month, your payment will be made on the third Wednesday of the month.
- If your birthday falls between the 21st and 31st of the month, your payment will be made on the fourth Wednesday of the month.
Make sure to check your bank account around the scheduled payment date to ensure you receive your increased benefit.
What Does This Mean for Retirees?
For many retirees, Social Security benefits are a major source of income, and the COLA increase helps ensure their purchasing power doesn’t diminish over time.
An extra $4,873 a month could go a long way toward covering daily expenses, healthcare costs, or other financial needs. While not every retiree will receive the maximum amount, even those receiving a smaller increase will still benefit from this adjustment.
In addition to the higher monthly payments, this increase may help retirees feel more secure and less stressed about their finances during the holiday season. The $4,873 check can provide an extra cushion that allows them to focus on enjoying time with family and friends instead of worrying about rising costs.
How the Increase Will Affect Taxes
It’s important to note that Social Security benefits may be taxable, depending on your overall income. If your combined income (which includes your Social Security benefits plus other income such as pensions, retirement savings withdrawals, or wages) exceeds certain thresholds, you may owe federal income taxes on a portion of your Social Security payments.
For individuals with a higher income, as the COLA increase boosts their monthly benefit, the taxable portion of their Social Security income could increase. It’s a good idea to consult with a tax professional to understand how this increase may impact your overall tax situation.
How Can Retirees Maximize Their Benefits?
While the COLA increase provides immediate relief, retirees can also take steps to maximize their Social Security benefits over time. Here are a few tips to consider:
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- Delay Social Security Claims: If possible, delaying your Social Security claim until age 70 can increase your monthly benefit. For each year you delay claiming past your full retirement age, your benefit amount increases by approximately 8%.
- Work Longer: If you’re still able to work and earn income, continuing to work for a few more years can boost your Social Security benefit, as your highest earning years are factored into the calculation of your monthly payment.
- Understand Tax Implications: Be mindful of how taxes might affect your Social Security benefits. Keeping your total income below certain thresholds could help reduce your taxable income.
Conclusion
This year, retirees have something extra to look forward to this holiday season—an increase in their Social Security benefits. With some lucky individuals receiving as much as $4,873 per month, it’s a welcome financial gift that can ease the pressure of rising costs.
Whether you’re using the extra funds to cover bills, healthcare expenses, or just to treat yourself, the boost in your monthly check is sure to make a difference.
Make sure to check your bank account in December and celebrate the holiday season with a little extra financial comfort.