Social Security is one of America’s oldest and most essential government programs, and it is continuously adapting and changing to keep up with economic changes. In fact, Social Security changes so frequently that understanding the fundamentals of how the program works is insufficient. You should also keep an eye out for annual revisions, which can influence everything from how much payroll tax is deducted from your paycheck to how much your benefit will fluctuate from year to year, among other things. Here are the seven Social Security changes you should be aware of as the new year approaches.
1. Cost-of-living adjustment
The Social Security Administration (SSA) modifies the amount of Social Security payments each year to account for rising inflation. This cost-of-living adjustment, or COLA, reached a record high of 8.7% in 2023 but will fall to 3.2% in 2024 due to lower inflation. According to the SSA, this means that the average Social Security payout will increase by about $50, however, this may vary significantly depending on the size of the present benefit.
2. Disability bracket increase
While most people are familiar with social stability for the retirement benefits it provides, it is also a vital source of financial stability for those who qualify as disabled. There are other eligibility conditions for disability payments, but one of them is that you cannot earn more than a specific amount and still qualify as disabled. This earnings level is adjusted annually. The following are the restrictions for 2024:
- Non-blind: $1,550/month, up from $1,470/month.
- Blind: $2,590 per month, up from $2,460.
- TWP: $1,110 per month, up from $1,050 per month during the trial period.
3. Supplemental security income increase
Supplemental Security Income (SSI) benefits, like Social Security retirement payouts, rise in lockstep with the rate of inflation. The rise for 2024 is 3.2%, the same as the COLA. Because SSI payments do not vary based on recipient, the SSA publishes a table that shows the exact amounts that SSI beneficiaries will receive in 2024:
- Individuals who qualify will receive $943 per month or $11,321.49 per year.
- Couples who qualify will receive $1,415 per month or $16,980.36 per year.
- People who are considered essential will receive $472 per month or $5,673.73 per year.
- Individual SSI resource restrictions stay unchanged from 2023, at $2,000 for individuals and $3,000 for couples.
4. Increase in social security wage base
Social Security is primarily supported by payroll taxes paid by current employees. However, the amount of your wages due to Social Security taxes is limited. This restriction, known as the Social Security Wage Base, is also adjusted annually to account for growing inflation. The Social Security Wage Base will increase to $168,600 in 2024. Earnings exceeding this threshold are exempt from Social Security taxes.
5. Increase in maximum benefits when retiring at full retirement age
For those retiring at full retirement age in 2024, the maximum benefit jumps to $3,822 per month from $3,627.
6. Change in retirement earnings test limits
While you are permitted to work after filing for Social Security benefits, if you earn too much, your payments will be temporarily cut. Specifically, the SSA will cut your retirement payout by $1 for every $2 you earn over the limit while under the age of 65. The SSA will cut your payout by $1 for every $3 you earn over the retirement limit in the year you reach full retirement age. For this calculation, however, a distinct restriction is applied.
The earnings cap for workers under the age of full retirement in 2024 is $22,320, up from $21,240. Workers can earn up to $59,520 in the year they reach full retirement age, up from $56,520 previously. It is important to note that after you reach full retirement age, there are no income limits or payout reductions. Furthermore, after you reach full retirement age, any amounts withdrawn are reincorporated into your continued monthly benefits. They are not forfeited or lost.
7. Potential insolvency
The Congressional Budget Office publishes data on the solvency of the Social Security program every year. While continued payroll taxes will always support benefits in some form or another, the Trust Funds themselves are expected to be empty by 2033. This means that payouts may have to be reduced by 25% by 2034. While legislative adjustments can serve to strengthen the system, those are the projections given by the CBO at the moment.
