Early Retirement or Delayed Gratification? A Guide to Social Security Timing in 2024
Written by
G. Brian Davis
Edited by
Cory Dudak
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Every year, the Social Security Administration (SSA) updates its benefits and brackets. Before you decide when to take the leap and retire, make sure you understand the latest rules and benefit updates from the SSA.
Upon turning 62, you qualify to receive early Social Security benefits. But if you do so, the SSA pays out only reduced benefits until you reach full retirement age (FRA).
Refresher: Age Brackets and Benefits for Social Security
Of course, the government never makes anything simple, including full retirement age. It changes depending on what year you were born, and is outlined specifically on the SSA website.
However, Uncle Sam does reward you if you delay taking Social Security benefits. For every year you delay after reaching full retirement age, you qualify for an extra 8% in benefits. The boosted benefits cap out at 32% above your FRA benefits, when you reach age 70.
Changes to Social Security in 2024
The SSA made several updates to benefit rules in 2024.
To begin with, the cost of living adjustment (COLA) for benefits rose 3.2%. That equates to a $59 monthly benefit bump from $1,848 to $1,907 for the average retiree. While lower than the massive 8.7% raise in 2023, it remains higher than the average annual increase of 2.5% going back to the 1990s, according to AARP.
The SSA also imposes an earnings test, and withholds some of your benefits if you continue working while collecting benefits before full retirement age. In 2024, the SSA withholds $1 of benefits for every $2 in earnings above $22,320, up from a threshold of $21,240 last year. In the year you reach FRA, the threshold shifts to $59,520 (up from $56,520), and they withhold $1 for every $3 in earnings above that threshold. That money does come back to you in the form of higher benefits when you reach FRA however.
Medicare Part B premiums also rose in 2024, as a less welcome change. If you aren’t up on your Medicare lingo, Part B premiums refer to the amount deducted from your Social Security benefits for Medicare coverage for doctor visits and outpatient treatment. The standard monthly premium increased by $9.80 to $174.70 in 2024, and the deductible also rose $14 to $240.
Finally, note that the income ceiling for paying taxes toward Social Security also rose. Taxpayers must now pay these “FICA taxes” on earnings up to $168,600, up from a ceiling of $160,200 last year. Note the 5.4% increase in taxable income — compared to a 3.2% increase in benefits — and you can see how the SSA is finding quiet ways to collect more tax dollars.
Should You Retire Now or Wait?
As a general rule, the longer you keep working and the later you start tapping Social Security, the more comfortable your retirement. Not only do you keep earning money later in life, but your Social Security benefits can also jump up to 32%. Use this benefit calculator to estimate your own future payments.
But ultimately, it depends on your own personal finances and goals. If you don’t care about the higher benefits and have enough money to retire now, that’s your prerogative. You can start taking benefits at age 62 if you like, or draw more on your nest egg now and delay taking benefits.
If you find yourself behind on retirement savings, the calculus changes. The longer you can work to keep padding your nest egg and delay taking benefits, the better. And for workers still approaching retirement, aim to invest more now to give yourself more flexibility when you reach your sixties.
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