Every year, something will change with Social Security, and nearly every American, working or retired, will be affected. That much is certain. That’s going to change in 2024 as a number of adjustments are planned for the coming year. The majority of improvements help people financially, but others will have the opposite impact.
The largest adjustment is a cost-of-living increase (COLA) that will increase Social Security benefits starting in January 2024 and was announced earlier this month. The 2024 COLA will be significantly less than the 8.7% raise Social Security recipients received in 2023 due to the current year’s falling inflation rate.
That is only one of many adjustments to Social Security that will take place in 2024. Here are six of them along with the people who will be most impacted.
The COLA for 2024 is expected to be 3.2%, which is less than two-thirds of the adjustment for this year but still higher than the average of 2.6% for the previous two decades. The impact will be felt by all Social Security recipients, though it will differ based on things like your benefit type and the time you claimed it.
According to The Motley Fool, the 3.2% increase will result in an average monthly payout increase of $59 for Social Security retirement beneficiaries. There will be a $48 monthly increase on average for those with long-term disability.
The increase in the maximum wages due to the Social Security payroll tax from $160,200 in 2023 to $168,600 in 2024 will mostly affect individuals earning high salaries. 6.2% of the 7.65% FICA tax that employees pay from their paychecks goes into Social Security. According to CNBC, which cited data from the Social Security Administration, roughly 6% of workers who pay Social Security taxes have annual incomes that are higher than the taxable maximum.
The maximum Social Security payout for employees who retire at full retirement age will increase from $3,627 in 2023 to $3,822 in 2024, according CPA Practice Advisor. Only individuals who file claims at FRA—which is presently either 66 or 67, depending on your birth year—are impacted by this. Benefit claimants who apply early are paid less each month.
If you make a specific amount of money while working after applying for Social Security retirement benefits, you may also be subject to an earnings test. The earnings exempt from the retirement earnings test rises to $22,320 from $21,240 the previous year, according to the SSA. Benefits withholding will amount to $1 for every $2 in earnings beyond that ceiling. After you reach full retirement age, you are no longer subject to these earnings rules.
According to the SSA, average payments for widowed women with two children will rise from $3,540 in 2023 to $3,653 in 2024. The average monthly compensation for elderly widows and widowers living alone will increase from $1,718 to $1,773. The average monthly payment for a disabled worker who has a spouse and one or more children will rise from $2,636 to $2,720.
The SSI Federal Payment Standard, which is paid to people who receive Social Security benefits in addition to Supplemental Security Income (SSI), will increase from $914 in 2023 to $943 in 2024. The standard monthly payment for couples will rise from $1,371 to $1,415.
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