Every year certain aspects of Social Security change. It is important to stay up-to-date and in-the-know with these changes. That way, you won't encounter any surprises on your Social Security benefit statements. So, let's talk about the Social Security changes for 2024.
The COLA Increase and How it will Affect your Social Security
On October 12 2023, Social Security announced that the COLA increase for 2024 will be 3.2%.
Everybody receiving Social Security will see their monthly benefit increase by 3.2% in January 2024. Because of this COLA increase, the average monthly benefit will increase from $1,848 to $1,907.
Additional Changes to Social Security in 2024
There will be more changes that you should be aware of. The Social Security taxable maximum will rise from $160,200 in 2023 to $168,600 in 2024.
What does that mean? In 2024 if you earn less than $168,600, you will pay taxes of 6.2% on all of your earned income.
But if your earnings exceed $168,600, any earnings in excess of that amount will not be subjected to those taxes.
Only 6% of all wage earners in the US have earnings that exceed $168,600. While 94% of all wage earners make less than that, they end up paying those same taxes on all of their earnings.
Social Security's Earning Test
If you claim your Social Security benefits prior to your Full Retirement Age and continue to work, you will be subjected to the Social Security’s earnings test.
In 2024 the earnings limit will be increase to $22,320.
If you claim your benefits prior to your Full Retirement Age, continue to work, and have earned income in excess of $22,320 in 2024, then for every $2 of earned income you receive in excess of that amount, you will have to give back $1 of received Social Security benefits.
So, depending on your level of earned income, you could end up giving back some, most or even all of your received benefits.
When you reach your Full Retirement Age, the earnings limit is increased to $59,520. And for every $3 of earned income in excess of that amount, you will have to give back $1 of received benefits.
The earnings test goes away once you reach your Full Retirement Age. In other words, once you reach your Full Retirement Age, you can collect your Social Security benefits, continue to work, make as much earned income possible, and you will never have to give back any received Social Security benefits.
Those are some of the major changes effecting Social Security in 2024.