Your Social Security Benefits Will Be Impacted Most in 2024 by 5 Factors
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Aja McClanahan
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Travis Woods
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Every year, the Social Security Administration (SSA) makes changes to its Social Security Retirement benefit program to keep the program viable and relevant to retirees’ ever-changing financial needs. Learn more about the latest updates to Social Security for 2024 and how these changes may impact your benefits as a retiree.
1. Cost-of-Living Adjustment
The laws governing how the SSA operates call for annual cost-of-living adjustments (COLAs), which are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W.) These adjustments are supposed to reflect the change in the cost of living over one year and take effect in January.
Down from the 8.7% COLA that went into effect in January of 2023, SSA implemented a 3.2% COLA that started in January of 2024. Kilolo Kijakazi, Acting Commissioner of Social Security has noted, “Social Security and SSI benefits will increase in 2024, and this will help millions of people keep up with expenses.”
Scott Bishop is a CPA and CFP and managing director at Presidio Wealth Partners. He acknowledged this smaller increase may not have been expected. “I know with inflation, many retirees are disappointed with the 3.2% COLA adjustment or ‘raise’ is disappointing,” he noted. “That is especially true given the 8.7% raise in 2022 and the 5.9% raise in 2021, but if you look at Social Security raises annually since 1975 (when the COLA Changed), it has averaged 3.77%. So, it is in line with the average raise.”
2. Maximum Benefit Amounts Have Changed
The maximum benefit depends on the age you retire. It also depends on other eligibility factors, such as your pre-retirement earnings and how long you work.
For those retiring at normal retirement age (NRA) in 2024, the maximum benefit would be $3,822. Those retiring at age 62 in 2024 would have a maximum benefit of $2,710. Waiting to collect benefits at age 70 in 2024 means your maximum benefit could go up to $4,873.
| Retirement age | 2023 | 2024 |
| Age 62 | $2,572 | $2,710 |
| Full retirement age | $3,627 | $3,822 |
| Age 70 | $4,555 | $4,873 |
3. Your Benefits May Be Subject to Federal Taxes
Since Social Security income is taxed based on your overall income level (gross income.) If your combined income, which includes your adjusted gross income, nontaxable interest and half of your Social Security benefits, exceeds a certain amount, some of your Social Security benefits could be taxable.
The thresholds for those filing an individual federal tax return are as follows:
- Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
- More than $34,000, up to 85% of your benefits may be taxable.
The thresholds for those filing a joint federal tax return are as follows:
- Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits.
- More than $44,000, up to 85% of your benefits may be taxable.
Though thresholds for paying taxes on Social Security benefits are fixed from year to year, the annual COLA can increase how much you’ll pay in federal taxes.
4. Your Medicare Part B Premiums Are Going Up
Retirees receiving Social Security retirement benefits use their Medicare Part B much like medical insurance coverage. It covers much of the costs for medical services like physician visits, outpatient care, home health care, durable medical equipment and some preventive services.
The standard monthly Part B premium, typically deducted from Social Security benefits, is increasing by almost $10, from $164.90 in 2023 to $174.70 in 2024. Also, the annual deductible for Medicare Part B will be $240 in 2024, up $14 from the $226 annual deductible in 2023.
Bishop explained, “Medicare premiums went up faster than the raise in Medicare, but that was not the case last year. They also have increased some benefits in Medicare in 2024.”
He added, “Those that qualify for Extra Help will have no Part D deductibles on drug plans and will also have lowered costs for certain drugs. So the cost of the insurance may have gone up, but the price for accessing healthcare for some has gone down.”
Finally, Medicare Part B premiums will increase for the eight percent of Medicare beneficiaries with higher incomes. Those earning more than$103,000 annually will pay more than the standard premium depending on how much they earn over that amount. The minimal income-related monthly adjustment amount high-earners will pay starts at $69.90 and can go up to $419.30.
5. Some of Your Social Security Benefits May be Withheld
Some of your Social Security benefits can be withheld if you are below NRA, collecting Social Security benefits and earning income from working (note, these benefits are added to the account from the months when benefits were withheld once you reach your NRA).
For 2024, the annual exempt amount is $22,320 if you haven’t yet reached your NRA and up to $59,520 if you reach your NRA in 2024. (Amounts for 2023 were $21,240 and $56,520 in 2023, respectively.)
The SSA withholds one dollar in benefits for every two dollars of earnings over the $22,320 threshold and one dollar in benefits for every three dollars of earnings over the $59,520 threshold.
Most of these changes are standard from year to year, with only some dollar amounts changing to account for inflation. Consult a financial professional to help you understand and account for Social Security benefits (and changes) in your broader financial plan.
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