One of the biggest and most established government programs in the United States is Social Security, which is always evolving to meet shifting economic conditions. In actuality, understanding the fundamentals of how Social Security works is insufficient because the program is subject to frequent modifications. Additionally, you should be aware of the yearly revisions, which can impact a variety of changes, including the amount that payroll tax is withheld from your paycheck and the amount that your benefit will fluctuate from year to year. Here are the seven changes to Social Security that you should be aware of as we approach the new year.
Social Security COLA 2024
The SSA modifies Social Security benefits annually to account for growing inflation. The cost-of-living adjustment, or COLA, hit a record high of 8.7% in 2023; but, due to declining inflation, the COLA will only be 3.2% in 2024. The SSA estimates that this will result in an average $50 increase in distribution, while actual amounts may differ significantly based on the size of the present benefit. Although Social Security is mostly recognized for providing retirement benefits, individuals who meet the eligibility requirements can obtain significant financial stability from it. Every year, this earnings threshold is modified. The monthly wage threshold for non-blind individuals has increased from $1,470 to $1,550. The monthly wage threshold for blind individuals has increased to $2,590 from $2,460. The earning criteria for the Trial Work Period (TWP) have increased from $1,050 per month to $1,110 per month.
SSI benefits rise in tandem with inflation, just as Social Security retirement benefits do. The rise for 2024 will be 3.2%, the same as the COLA. Since Social Security retirement benefits are not dependent on the individual recipient, the SSA releases a table that indicates the precise amounts that recipients of SSI will receive in 2024. Those who qualify will earn $943 monthly, or $11,321.49 annually. Couples who qualify will earn $1,415 a month, or $16,980.36 annually. Individuals deemed essential will be paid $472 per month, or $5,673.73 annually. The 2023 SSI resource restrictions of $2,000 for single people and $3,000 for couples apply. The SSI student exclusion, however, rises from $2,220 and $8,950, respectively, to $2,290 a month, or $9,230 annually.
Social Security Wage Base
The main source of funding for Social Security is payroll taxes paid by active employees. But the amount of your income that is liable to Social Security taxes is limited. The Social Security Wage Base, which is this upper limit, is also adjusted annually to account for increases in inflation. The Social Security Wage Base will increase to $168,600 in 2024. Social Security taxes are not applied to earnings over this threshold. After filing for Social Security benefits, you are free to work, but if your income is too high, your payout will be temporarily lowered. In particular, if you earn more than the maximum amount while you are under your full retirement age, the SSA will take $1 out of your retirement benefit for every $2 you make over the cap.
For every $3 you earn over the pension limit, the SSA will take $1 out of your benefit the year you reach the age of full retirement. But this computation makes use of a different limit. The salary cap for employees under the full retirement age is going to increase from $21,240 to $22,320 in 2024. The salary cap for employees in the year they attain full retirement age has increased from $56,520 to $59,520. Keep in mind that there are no more income limitations or payout reductions after you reach full retirement age. Furthermore, any sums that have been withheld are included back into your regular monthly installments as soon as you reach full retirement age. They are not misplaced or abandoned.