Yahoo Finance 4 Biggest Changes Coming for Retirees in the Second Half of 2024
A number of changes that impact retirees took effect at the beginning of 2024, which means they’ve been in place for several months now. But some retirees might not be impacted until the latter half of the year.
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If you are a retiree or are about to become one, and you will reach a certain milestone during the second half of 2024, here the four biggest changes you might encounter.
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New Social Security COLA
If you are retired and decide to claim Social Security during the second half of 2024, your monthly payment will include this year’s 3.2% cost-of-living adjustment. The 2024 COLA pushed the average Social Security retirement check to $1,866.44 a month as of April, according to the Social Security Administration.
This year’s COLA represents a decline of nearly two-thirds from last year’s adjustment but is still above the 2.6% average over the past couple of decades. All Social Security recipients will feel an impact, though it varies depending on factors such as your type of benefit and when you claimed it.
Social Security Earnings Test
This change also applies to retirees who file for Social Security retirement benefits during the second half of the year. If you still earn outside income either through investments, side hustles or some other source, that income is subject to an earnings test for making a certain amount of money in a given year. Earnings exempt from the test increased to $22,320 in 2024 from $21,240 the year before. For every $2 in earnings above that limit, $1 in benefits will be withheld. These rules no longer apply when you reach full retirement age.
Higher Medicare Premium
Retirees who turn 65 during the second half of 2024 and sign up for Medicare benefits will pay higher premiums than a year ago. The Medicare Part B premium is now $174.70 a month, up from $164.90 last year.
Here are some other Medicare changes to note during the second half of 2024, according to AARP:
Medicare enrollees who have Part B premium payments deducted directly from their Social Security payments will see a deduction of $9.80 a month.
The annual deductible for Part B is $240 in 2024, up from $226 last year.
Required Minimum Distribution
If you turn 73 during the second half of 2024, you have until April 1, 2025, to make your first required minimum distribution. An RMD is a mandatory withdrawal you must make from certain types of retirement accounts each year. It typically applies to traditional IRA, SEP IRA, SIMPLE IRA, 401(k), 403(b) and 457(b) retirement accounts as well as profit-sharing plans or other defined contribution plans.
The penalty for failing to make your RMD on time is up to 50% of the amount by which your withdrawal fell short of the required minimum, according to the IRS. For more information, visit this IRS site.
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