The holiday season is typically filled with gifts, cheer, and a variety of surprises. This year, retirees will receive a particularly special gift from the Social Security Administration.
Retirees will receive an increase in their benefits as part of the annual Social Security cost-of-living adjustment (COLA), which could result in a substantial check in their bank accounts. For some, the check could be as much as $4,873—just in time for Christmas.
Many Social Security recipients will receive a higher monthly check in December as a result of the COLA adjustment, which is intended to keep up with inflation and rising living costs. This is all 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 maximum amount that a retiree can receive, but not everyone will get it. The size of your Social Security check is determined by a variety of factors, including your lifetime earnings and when you begin claiming 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 calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Due to rising inflation in 2023, the Social Security Administration announced an 8.7% COLA adjustment for 2024—one of the largest adjustments in recent history. This increase is intended to assist beneficiaries in meeting the rising costs of goods and services such as food, housing, and healthcare, which have increased over the last year.
This adjustment comes as a welcome relief to retirees who have been relying on a fixed income. The COLA increase means more money in the bank, which can help alleviate some of the financial pressures caused by inflation.
When Will the Checks Arrive?
The Social Security Administration typically starts processing COLA increases in December. If you already receive Social Security benefits, you may see the increased amount reflected in your bank account as early as December 2024. Depending on your birth date, your Social Security check could arrive sooner or later in the month.
Here’s an overview 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.
Individuals with higher incomes may see an increase in the taxable portion of their Social Security income as the COLA increases their monthly benefit. It’s a good idea to speak with a tax professional to see how this increase will affect your overall tax situation.
How Can Retirees Maximize Their Benefits?
While the COLA increase provides immediate relief, retirees can also work to maximize their Social Security benefits over time. Here are a few suggestions 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 during the holiday season: an increase in Social Security benefits. With some lucky individuals receiving up to $4,873 per month, it’s a welcome financial gift that can help alleviate the stress of rising costs.
Whether you use the extra money to pay bills, cover medical expenses, or simply treat yourself, the increase in your monthly income will make a difference.
Check your bank account in December to enjoy the holiday season with a little extra financial comfort.
