Social Security Changes in 2024
Written By: Marissa Waldron, CFP®
We’re well into the fourth quarter of 2023, so it’s time to start looking ahead to the year 2024. The Social Security Administration (SSA) recently released their “Fact Sheet” for 2024 which outlines several changes to Social Security that will impact almost everyone, from beneficiaries already receiving checks to working Americans paying payroll taxes. The most anticipated announcement is the above-average cost-of-living adjustment (COLA). Read on to learn what’s changing!
Various income thresholds that affect Social Security benefits are increasing. This is typical as wages and inflation continue to go up. These different thresholds include:
- The taxable earnings cap will go up to $168,600 (from $160,200). All income earned up to this amount is subject to Social Security tax. This will only affect high-income workers.
- The annual earnings limit for early filers is going up to $22,320 ($1,860 per month). A majority of retirees file for Social Security benefits before their full retirement age (FRA). If they are collecting Social Security and continue working, they are subject to an earnings test. For every $2 earned that is over the earnings limit, $1 of Social Security benefits will be withheld. So early filers will be able to earn a bit more before having some of their benefits withheld. Note that the earnings limit is different in the year you reach FRA and no longer applies after FRA.
- Income thresholds for workers with disabilities are increasing. There are approximately 7.5 million workers receiving disability benefits, and they are allowed to earn income up to certain limits without jeopardizing the disability payments they receive. Next year, this amount for non-blind workers will be $1,550 per month, and $2,590 per month for blind workers.
- The amount of earned income needed to earn a work credit is increasing to $1,730. To qualify for Social Security benefits, workers must earn 40 lifetime work credits. One can earn a maximum of four credits per year. So next year, if you earn $6,920 (4 x $1,730) during the year, you’ll receive the maximum of four credits in 2024.
The maximum monthly payout one can receive is going up. Currently, the MOST a beneficiary can collect at their full retirement age (FRA) is $3,627 (if they have maxed out the taxable earnings cap for 35 years). In 2024, a worker starting to collect benefits at their FRA could earn up to $3,822 per month. Note: it is possible to receive more than this amount by delaying benefits past full retirement age.
Last, but certainly not least, is the cost-of-living adjustment. Social Security benefits will increase by 3.2% next year, which is above the 20-year average of 2.6%. For the average retiree, this means about $59 more in their monthly check.
This could be your last holiday season to buy the grandkids a DVD. Major retailer Best Buy will phase out the sale of DVDs and Blu-ray discs starting at the start of 2024.
This week in history
1946 – Happy 77th birthday to long-time gameshow host Pat Sajak.
1962 – The Cuban Missile Crisis occurred on Oct. 14 after the discovery that the Soviets were building missile sites in Cuba. President John F. Kennedy made a televised speech to the nation, informing them about the crisis a week later on Oct. 22, 1962.
1985 – The first Blockbuster video-rental store opened in Dallas, Texas. It eventually became one of the world’s largest providers of in-home movies and game entertainment but ultimately filed for bankruptcy in 2010.
1987 (Oct. 19) – “Black Monday,” the largest-ever one-day percentage decline in the Dow Jones Industrial Average. The Dow dropped 508 points – 22.6 percent – in a panic that foreshadowed larger systemic issues.
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