The one thing you can count on with Social Security is that something will change every year — and just about every working or retired American will feel the impact. That will be the case in 2024, with several changes slated for the new year. Most of the changes will give people a financial lift, but a couple will have the opposite effect.
The biggest change, announced earlier this month, is a cost-of-living increase (COLA) that will boost Social Security payments beginning in January 2024. Because of this year’s declining inflation rate, the 2024 COLA will be much less than the 8.7% increase Social Security recipients have enjoyed in 2023.
That’s just one of several changes coming to Social Security in 2024. Here’s a look at six of them, and who will be affected the most.
1. COLA Increase
The COLA for 2024 will be 3.2% — a decline of nearly two-thirds from this year’s adjustment but 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.
For Social Security retirement beneficiaries, the 3.2% increase will boost the average monthly payment by $59, The Motley Fool reported. Those with long-term disabilities will see an average increase of $48 a month.
2. More Income Will Be Taxed
The maximum amount of earnings subject to the Social Security payroll tax will increase to $168,600 in 2024 from $160,200 in 2023, which will mainly impact those with high salaries. Workers pay a 7.65% FICA tax from their paychecks, with 6.2% of that going to Social Security. About 6% of workers who pay Social Security taxes have earnings above the taxable maximum each year, CNBC reported, citing Social Security Administration data.
3. Maximum Social Security Benefit Will Increase
The maximum Social Security benefit for a worker retiring at full retirement age will rise to $3,822 in 2024 from $3,627 in 2023, according to CPA Practice Advisor. This affects only those who claim benefits at FRA, which is currently either 66 or 67, depending on your birth year. Those who claim benefits earlier receive smaller monthly payments.
4. Higher Earnings Test
If you also continue to work after filing for Social Security retirement benefits, you might be subject to an earnings test if you earn a certain amount of money. In 2024, the earnings exempt from the retirement earnings test will increase to $22,320 from $21,240 in 2023, according to the SSA. For every $2 in earnings above that limit, $1 in benefits will be withheld. These earnings rules no longer apply once you hit full retirement age.
5. Spousal and Disability Benefits Will Be Bigger
Widowed mothers with two children will see average benefits increase to $3,653 a month in 2024 from $3,540 in 2023, according to the SSA. For aged widows and widowers living alone, average benefits will rise to $1,773 a month from $1,718. For a disabled worker with a spouse and one or more children, the average monthly benefit will increase to $2,720 from $2,636.
6. Higher SSI Payment Standards
For individuals who receive Supplemental Security Income (SSI) benefits in addition to Social Security, the SSI Federal Payment Standard will rise to $943 a month in 2024 from $914 in 2023. For couples, the standard will increase to $1,415 a month from $1,371.
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