Home Personal Finance COLA Social Security update — First round of $4,555 payments automatically drop soon

COLA Social Security update — First round of $4,555 payments automatically drop soon

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Description of the Social Security Fund

The majority of Americans give 6.2% of their salary to the Social Security Fund, and employers match that percentage. usa news.

The self-employed donate 12.4% of their income to social security.

Workers who have made sufficient contributions to the scheme can begin receiving retirement benefits at age 62 or older.

If you become disabled, you can qualify for benefits sooner.

When you die, your family may be entitled to survivor’s payments.

A ‘Stealth Tax’ on Social Security Payments – What to Watch Out For

Social Security recipients may be taxed more than expected this year following a significant increase in the Cost of Living Adjustment (COLA).

Given that Social Security income levels are adjusted for inflation, this could lead to an increase in income tax on benefits.

MassMutual financial planning consultant and social security expert David Freitag describes the situation as a “stealth tax.”

However, the money guru shares two ways Social Security recipients can avoid paying more taxes than they should.

If you receive Social Security, you can borrow anywhere from 0-85% of your benefits, depending on your income.

The more total income you have, which includes adjusted gross income, non-taxable interest, and a portion of social security benefits, is taxed more.

Cheapest and most expensive place to retire in comfort

If you’ve decided where to retire, see this list by researchers at: smart asset.

A new study of 25 metropolitan areas in the country shows where the prices are most expensive.

But the study also revealed it to be the most affordable.

Let’s take a look at the most expensive cities and what after-tax salary you need to live comfortably there.

  1. San Francisco, CA – Oakland – Berkeley – $84,026
  2. San Diego – Chula Vista – Carlsbad, CA – $79, 324
  3. Boston – Cambridge – Newton, Massachusetts – $78,752
  4. New York – Newark – Jersey City, New York – New Jersey – $78,524
  5. Seattle, Washington – Tacoma – Bellevue – $77,634

And the most affordable:

  1. St. Louis, Missouri – Illinois – $57,446
  2. Detroit – Warren – Dearborn, Michigan – $58, 358
  3. San Antonio – New Braunfels, texas – $59,270
  4. Philadelphia – Camden – Wilmington, Pennsylvania – New Jersey – Delaware – $61,678
  5. Charlotte-Concord-Gastonia, North Carolina-South Carolina – $62, 110

COLA could fall below 2% in 2024

COLA could drop dramatically from an 8.7% increase to less than a 2% increase in 2024.

“Based on February inflation data, the COLA appears to be below 3% and could drop to 2% or even lower range by the third quarter if the 12-month average continues to decline.” said Mary Johnson of the Social Security Administration. She is a Senior Citizens League Medicare Policy Analyst.

COLA is based on urban wage and office worker Consumer Price Index (CPI-W) inflation data that tracks the cost of consumer goods and services.

The Social Security Administration calculates the payout percentage increase based on the increase in CPI-W compared to the previous year.

Social security could be cut by 20% amid financial crisis

Social Security beneficiaries are at risk of a 20% cut in benefits in 2034, according to the report. released by the Ministry of Finance

The board said the Social Security Trust Fund will begin to run out of money by 2023 unless Congress takes action.

Program costs are projected to exceed total annual income in 2023 as COLA grows significantly.

But Kiroro Kijakazi, acting director of the Social Security Administration, believes there will be time for future funding to be replenished.

“Informed debate, creative thinking and timely legislative action will help Social Security continue to protect future generations,” he said at a recent Social Security Administration (SSA) meeting. statement.

The Social Security Trust Fund will decrease by $22 billion in 2022 to a total of $2.8 trillion.

Alternative Retirement Options – Roth IRA

A second great way to save for retirement is to pay a Roth IRA.

Employers do not contribute to these funds, but having a Roth IRA account along with a 401K has some advantages.

You can invest up to $6,500 if you’re under 50 and up to $7,500 if you’re over 50 each year.

This money may be tax-free in your Roth IRA, and the money you withdraw when you retire is tax-free.

You can also withdraw your donation early without penalty.

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