6 Ways Retirement Will Be Different In 2024

Changes for 2024

A new year brings new changes in retirement planning.  We wanted to take a moment to discuss some of the important changes impacting contribution limits, Social Security payments, Medicare premiums, and more.

1. Social Security Payments

Social Security recipients will see their monthly payments increase by 3.2% which reflects the Cost-of-Living Adjustment (COLA) for 2024.  This is not as high as the 8.7% increase in 2022 as it reflects a lower recorded inflation rate increase in 2023.

2. Medicare Costs

Standard premiums for Medicare Part B will be rising 6% from $164.90 to $174.70.  For many these premiums are deducted from Social Security payments so this will be reflected in their monthly premiums.

3. IRA Contributions

Limits for 2024 contributions into an Individual Retirement Account will increase to $7,000.  For individuals aged 50 or older there is an additional $1,000 catch-up contribution so the total contribution limit for those aged 50 or older is $8,000.

4. 401(k) Contributions

Contribution limits for 2024 into 401(k) and 403(b) plans will increase to $23,000 per individual in 2024.   Those aged 50 or older can contribute an additional $7,500 which brings the total contribution limit for those aged 50 or older to $30,500.

5. Standard Deduction

Most taxpayers take the standard deduction when filing their taxes.  For 2023 tax returns filed by April 15, 2024, the standard deduction for married couples will be $27,700.  The standard deduction for individual taxpayers will be $13,850.

For those aged 65, they will receive a higher standard deduction.  For a married couple, the deduction will increase by $1,500 for each qualifying individual for a potential deduction of $30,700 if both individuals qualify.   For an individual filer, the standard deduction will increase by $1,850 for a total of $15,700.

6. Social Security Earnings 

If you claim Social Security prior to reaching full retirement age there is an income limit you are able to earn before your benefit begins to be negatively impacted.   In 2024, that limit will be $22,320.   Any earnings above that amount may result in a reduced Social Security benefit.

Conclusion

2024 brings new changes to retirement planning and with those changes come opportunities to put yourself in a better position for the future.  The first step is to understand the changes being made.  The next step is to see how you can apply these changes to your own personal situation.  If you want help with that last part, please feel free to reach out to us.

Author: James (JT) Cox

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