With Social Security, there’s one thing you can always bank on every year, something will change, and almost every American, working or retired, will be affected. That’s going to change in 2024 as several adjustments are planned for the coming year. While the majority of the adjustments will help people financially, some will have the reverse impact. The largest adjustment is a COLA increase 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.
COLA Inflation
The COLA for 2024 is expected to be 3.2%, down almost two-thirds from 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 pension beneficiaries. There will be a $48 monthly increase on average for those with long-term disability.
Taxes On Income Will Increase
The increase in the maximum wages due to the payroll tax imposed by Social Security from $160,200 in the year 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 towards Social Security. According to CNBC, which cited data from the Social Security Administration, roughly 6% of workers who pay taxes on Social Security have annual incomes that are higher than the taxable maximum.
Social Security Maximum Benefit Will Go Up
According to CPA Practice Advisor, the maximum Social Security payment for an employee who retires at full retirement age will increase from $3,627 in 2023 to $3,822 in 2024. Only individuals who file claims at FRA which is presently either 66 or else 67, determined by your birth year are impacted by this. Benefit claimants who apply early are paid less each month.
Test of Higher Earnings
If you make a specific amount of money while working after applying for retirement benefits from Social Security, you may also be subject to an earnings test. The SSA reports that the earnings exemption from the retirement income test will rise from $21,240 in 2023 to $22,320 in 2024. Benefits withholding will amount to $1 for each $2 in income beyond that ceiling. After you reach full retirement age, you are no longer subject to these earnings rules.
Benefits For Spouses And Disabilities Will Increase
According to the SSA, average payments for widowed women with two kids will rise from $3,540 in the year 2023 to $3,653 in 2024. The average monthly compensation for elderly widows and widowers residing alone will increase from $1,718 to $1,773. The average monthly payment for a worker who is disabled and has a spouse along with one or more children will rise from $2,636 to $2,720.
