WE PACKED THE COURTROOM AT THE APPEAL HEARING, READ ALL ABOUT IT ON OUR ACT NOW PAGE
WE PACKED THE COURTROOM AT THE APPEAL HEARING, READ ALL ABOUT IT ON OUR ACT NOW PAGE
As 2024 ushers in a wave of significant changes to Social Security, beneficiaries across the board are poised to experience shifts that could impact their financial futures. From the introduction of a reduced cost-of-living adjustment (COLA) to increased taxable maximum earnings, these updates promise to recalibrate the landscape of retirement
and disability benefits.
This pivotal moment in Social Security’s evolution not only reflects adjustments to economic realities but also signals a crucial time for Americans to reasses their financial planning strategies.
2024’s COLA Adjustment:
Social Security’s cost-of-living adjustment (COLA) for 2024 is set at 3.2%, marking a significant reduction from the previous year’s 8.7% increase. This adjustment reflects changes in inflation rates and is designed to help beneficiaries maintain their purchasing power. Every Social Security recipient, from retirees to those with disabilities, will see an increase in their monthly benefits, though the exact boost will depend on individual benefit types and when they were claimed.
Increased Taxable Earnings Ceiling:
In 2024, the maximum earnings subject to Social Security payroll taxes will rise to $168,600 from $160,200. This change affects higher-income workers, who will contribute a larger portion of their earnings to the Social Security system. The adjustment is part of an annual update to keep pace with wage growth and affects only a small percentage of workers, ensuring the system’s continued funding.
Boost in Maximum Benefits:
The maximum Social Security benefit for individuals retiring at full retirement age will increase to $3,822, up from $3,627. This enhancement targets beneficiaries claiming their benefits at the age of 66 or 67, encouraging delayed retirement. It reflects the system’s efforts to adjust for economic conditions, rewarding those who contribute for a longer period.
Rise in Spousal and Disability Benefits:
Social Security will increase benefits for spousal and disability recipients in 2024, with specific amounts varying by beneficiary type. This change ensures that vulnerable groups, such as widowed parents and disabled workers, receive necessary support. It reflects an ongoing commitment to adjusting benefits in line with living costs, providing a safety net for those in need.
Higher SSI Payment Standards:
Supplemental Security Income (SSI) recipients will see their Federal Payment Standard increase to $943 for individuals and $1,415 for couples. This adjustment helps low-income, elderly, or disabled individuals who rely on SSI for basic needs, reflecting an effort to ensure that benefits keep pace with the cost of living.
Adjusting for Cost of Living:
Across all changes, a consistent theme for 2024 is the adjustment of Social Security policies to better align with the cost of living. Whether through the COLA increase, higher payment standards for SSI, or adjusted benefit amounts, the aim is to provide a stable income source that keeps pace with economic changes, safeguarding beneficiaries’ financial well-being.
Conclusion:
As the dust settles on the changes to Social Security in 2024, it’s clear that staying informed and adaptable is more crucial than ever for beneficiaries. These updates not only underscore the importance of strategic financial planning but also highlight the ongoing efforts to ensure the program’s responsiveness to economic shifts and demographic trends.
Moving forward, individuals will need to navigate these changes proactively to secure their financial well-being in retirement and beyond.
If you are a FDNY firefighter and are planning for retirement, this article may provide some helpful tax information to be aware of. I will go through and list some of the differences in taxation you will see as an active-duty firefighter compared to a retiree. The topics mentioned include the change in FICA taxation, benefits for members who retire in NY state or in a state with no income taxes, some of the effects of moving to a different state, and a tax planning strategy that may be worth considering.
Starting off on a positive note, when it comes time to retire and you switch from earning a paycheck to collecting a pension, you will notice a significant change in tax withholdings. Social Security and Medicare taxes – known as FICA applies to earned income but does not to pension income. Therefore, you will not see FICA taxes being withheld from your pension check. To give context, for someone earning under the wage base limit, which was $142,800 in 2021, the FICA tax represents 7.65% of income (for those earning above the wage base the FICA tax progressively becomes a lower percentage of income). Additional good news is that FICA tax also does not apply to withdrawals from retirement accounts like the 457 or an IRA. It is important to note however that if you continue to work in another job once retired you will pay FICA taxes income earning from that job.
Another positive note is that unlike when you are actively working, pension income is not subject to state or city income taxation in New York State. For those residing in the five boroughs, state and city income taxes combined can often amount to 6-8%+ of income, and for those living outside NYC state taxes can still represent 4-5% or more. These state and local benefits can also apply to retirement accounts that are considered pension plans such as excess pension contributions and UFA and UFOA annuities. So, in addition to not owing FICA taxes on your pension, you will also not owe state or city income taxes on your pension if you stay in New York State in retirement or move to a state with no income tax or that does not assess taxes to New York public pensions. If you want to consider moving to a different state that charges income taxes, you will want to work with your accountant or tax advisor to determine the tax consequences to doing so.
There are additional tax benefits that can make New York a friendly tax state for FDNY retirees. The first is that social security benefits are not subject to taxation in New York. The second is that those aged 59.5 and older are able to deduct $20,000 on their state tax return each year from retirement income. This can be an added tax benefit if you would like to take a withdrawal from a retirement account like the 457 or an IRA, or when it comes time to start taking required minimum distributions. You will also want to consider these tax benefits if you are considering moving to another state in retirement. One way for someone to save even further in state taxes upon retirement would be to move to a state that does not have an income tax like Florida. But for those who maintain their residence in New York there are many benefits the state offers, particularly to retirees with public pensions.
One tax planning strategy that may be worth considering for retired FDNY members is converting retirement funds into a Roth IRA. This can work particularly well for FDNY members who qualify for a disability pension in which most of their income is federally tax free and if they have accrued a significant balance in retirement accounts that will be subject to required minimum distributions (RMD’s) in the future. By converting some money each year in between the time of their retirement date and when they start collecting social security and RMD’s from retirement accounts, a retired FDNY member can pay taxes as they go and shift money from taxable accounts into a tax-free account. This strategy requires careful planning and should be discussed with a tax advisor before being executed.
As listed in this article, there are many tax benefits in place for FDNY retirees including not owing FICA taxes on their pension, not owing state or local taxes on their pension or pension retirement accounts if they stay in New York or move to a state that does not charge income taxes on public pensions, and for those who stay in New York additional benefits include not paying state tax on social security and getting a tax break on the first $20,000 in withdrawals in retirement accounts for those 59.5 and older. These various benefits can help FDNY retirees keep more of their hard-earned retirement benefits. For those contemplating moving to another state, they should work with their tax advisor to determine the additional tax costs or benefits associated with changing their state of residence.
*Disclosure this article does not constitute tax advice and we would advise you to work with a tax professional to discuss any of these topics further
Check your pension statements for Catastrophic Insurance
Pension Deductions-
It has come to the UFOA’s attention that pension deductions for catastrophic insurance premiums to Mercer may not have taken effect after a member retired or may have stopped since a member’s pension was reclassified. All retired members are urged to review their quarterly pension statement to verify that catastrophic insurance premiums are being deducted. The pension deduction code for catastrophic insurance premiums on the pension statement is CHIP MISC. If premium payments are not being deducted from your pension, you should contact Mercer immediately at 1-800-503-9230, option 2 and make alternate payment arrangements to bring their account up to date. You may also request that Mercer resume the premium deductions through monthly pension deductions. The UFOA does not process pension deductions or catastrophic insurance premium payments to Mercer.
WHAT'S ON THIS PAGE?
-OUR MEETINGS INFORMATIVE AND FUN!
-MEETING LOCATIONS
~Volunteers for the Fire Museum~
-Counseling Unit Breakfast Schedule~
AND
How to Join the
Retired Members Association -JUST GO TO THE HOME PAGE
We always bring in interesting and informative speakers to address you on the issues at hand. See above, Leroy McGinnis from the UFA at a meeting last year. This past year we have had others speak about wills and trusts, health care, pension issues, upcoming events etc. Jimmy Hayhurst asks all to contribute to Building Homes for Heroes and the response is always positive for our disabled war vets.
See above, Jim Hayhurst addressing a packed house at our meeting in New Hyde Park at the Elk's Club; 901 Lakeville Road. Our other location is in Brooklyn at the K of C Hall; 3051 Nostrand Ave [corner of Quentin Road and Nostrand Ave] We begin at 8pm and enjoy food and beverages but most of all we enjoy hanging out with friends. Make it a point to get to one
of our meetings,
we'd love to have you!
BECOME A VOLUNTEER AT THE FIRE MUSEUM
278 SPRING ST. NYC, NY
One day a week for a few hours plus ample parking.
Helps keep our great history alive to school children
Contact: Patti Murphy, Executive Director (212) 691-1303 est. 15
or Jim Vreeland, Volunteer (718) 833-6410
~
COUNSELING UNIT
STAY CONNECTED
BREAKFAST SCHEDULE
~Fort Totten CSU:
Fort Totten, Bldg 413B Bayside, NY 11361 (718) 352-2140 meets the 3rd Friday of every month. Meetings begin at 10:00am
~Deer Park Firehouse
94 Lake Ave. Deer Park, NY 11729 (631) 667-3500
meets 2nd Tuesday of every month. Meetings begin at 9:00am
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~Staten Island: 1688 Victory Blvd Suite 101 Staten Is., NY (718) 815-4111 Meets the last Tuesday of every month , the location for the breakfast is Jimmy Max Restaurant 280 Watchoque Road
~Middletown CSU: 2279 Goshen Tpke. (845) 695-1029.
Meets the 2nd Tuesday of every month Meetings begin at 9:00am For further information: Contact Greg Smith at (212) 570-1693 ext-317
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