2024 Financial Changes: Boosting Social Security, HSA, and Retirement Savings
November 13, 2023
By Samuel Richter
Senior Securities Analyst
We will soon enter the final stretch of 2023. Before we get into the busy holiday season, let’s look at changes coming in 2024 for social security, health savings accounts, and retirement accounts.
Social Security Cost of Living Adjustment (COLA)
The Social Security cost of living adjustment (COLA) is an annual change in the amount of benefits received based on levels of inflation. The reason for it is to help social security recipients keep up with the rising costs of goods and services. For 2023, the COLA was 8.7% as inflation reached a 40 year high. While inflation is still well above where we would like to see it, it has come down throughout the year, resulting in a COLA of 3.2% for 2024. This means social security recipients will see their benefit grow by $3.20 for every $100 they currently receive starting in January.
Health Savings Account Contribution Limit
Individuals using a high deductible health plan with a health savings account (HSA) can contribute up to $4,150 in 2024. For those with family coverage, the limit will be $8,300. These HSA limits are up from $3,850 and $7,750, respectively. The catch-up contribution limit will remain unchanged at $1,000 for those 55 and older.
As a reminder, HSA’s are a great tool for building wealth. They are triple-tax free, which means you can make tax-free contributions, grow tax-deferred earnings, and make tax-free withdrawals for qualified health care expenses. If you are interested in setting up a new HSA, contact us today to get started.
401(k) Maximum Contribution Limit
The amount individuals can contribute to their 401(k) plans in 2024 will increase to $23,000, up from $22,500 this year. The catch-up contribution limit for those aged 50 and over will remain at $7,500. This results in a maximum contribution for those 50 and older of $30,500. Looking even further ahead at 2025, individuals ages 60 through 63 will be able to make catch-up contributions of up to $10,000 annually.
Individual Retirement Account (IRA) Contribution Limit
Similar to the 401(k) increase, the maximum annual IRA contribution will increase to $7,000, up from $6,500. The IRA catch-up contribution limit remains $1,000 for 2024.
All these changes give people the opportunity to save more for retirement. While the maximum contribution limits may not affect everyone, it is important to think about increasing your own contribution yearly. Small increases can make a huge difference in the long term. Contact us today to discuss if you are set up for success in retirement. Your financial success matters to us!