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 a number of 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 cost-of-living adjustment (COLA) which 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.
COLA Inflation
The 2024 COLA 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% boost 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 on 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. Approximately 6% of employees who pay taxes related to Social Security make more money annually than is taxable.
Social Security Maximum Benefit Will Go Up
In accordance with CPA Practice Advisor, the highest possible Social Security payment for an employee who retires at FRA (full retirement age) shall rise 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, based on 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 Social Security benefits for retirement, you may also be subject to an income test. The SSA reports that the earnings free from the retirement revenue test will rise from $21,240 in 2023 to $22,320 in 2024. Benefits withholding will amount to $1 for each $2 in earnings 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 by 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 who has a spouse & one or more children will rise from $2,636 to $2,720.