Starting today, a significant change to Social Security benefits is now in effect, impacting retirees across the country. This update marks an important shift that could alter the way millions of Americans plan for their retirement. Whether you’re already receiving Social Security benefits or are nearing retirement, this change is something you’ll want to understand. Here’s a breakdown of the new update and how it might affect your payments.
What’s the New Change to Social Security for Retirees?
The most significant update is the adjustment to Social Security’s cost-of-living (COLA) increase, which directly impacts the amount retirees will receive. The COLA for 2024 has been set at 3.2%, which will increase monthly Social Security payments for retirees and other beneficiaries.
Additionally, there are changes to the earnings limits and maximum taxable income, which could influence some retirees’ benefits if they are working while receiving Social Security. The Social Security full retirement age for those born in 1960 or later has also seen slight adjustments.
Here’s a deeper look into how these changes will unfold and who will benefit the most.
1. 3.2% Cost-of-Living Adjustment (COLA) Increase
Each year, Social Security benefits are adjusted for inflation through the COLA, which ensures that the purchasing power of retirees is not eroded by rising living costs. For 2024, the COLA increase of 3.2% is officially in place.
- Average Increase: The typical Social Security recipient will see an extra $50 to $100 per month in their benefits, depending on the amount they are currently receiving.
- Impact on Retirees: This increase will provide relief to those whose purchasing power has been strained by inflation, especially for healthcare, housing, and everyday expenses.
2. Changes to Earnings Limits for Working Retirees
For retirees who choose to continue working while collecting Social Security, there are new earnings limits that could impact their benefits:
- If you are under full retirement age, you can earn up to $21,240 without having your benefits reduced. However, for every $2 you earn above this threshold, $1 in benefits will be withheld.
- Full Retirement Age or Older: If you’ve reached full retirement age, you can earn as much as you want without any reduction to your Social Security benefits.
3. Adjustments to Maximum Taxable Income
The maximum taxable income limit has also increased for 2024. This means that higher-income earners will pay more into the Social Security system to support the benefits of current retirees. In 2024, the maximum taxable earnings for Social Security will rise to $169,200, up from the previous limit of $160,200 in 2023.
This increase allows for higher Social Security payouts to certain individuals, especially those who have worked at higher-paying jobs throughout their careers.
4. Full Retirement Age Adjustment
For those born in 1960 or later, the full retirement age (FRA) remains at 67. This means that you are eligible to begin receiving full Social Security benefits when you reach age 67, regardless of whether you are still working or not.
However, if you claim benefits before reaching your FRA, your monthly payments will be reduced. Conversely, if you wait until after your FRA to start receiving benefits, your payments will be increased by 8% per year until you reach age 70.
5. Maximum Social Security Benefit for 2024
The maximum Social Security benefit a retiree can receive in 2024 depends on the age at which they start claiming. For someone who waits until age 70 to start benefits, the maximum monthly payment could be as high as $4,555. Those claiming earlier will see a reduced amount, with the typical retiree receiving about $1,800 per month as their average payment.
FAQs About the Social Security Changes in 2024
1. How much more will I receive from Social Security in 2024?
The COLA increase of 3.2% means most retirees will see an increase of $50 to $100 per month in their Social Security checks, depending on the amount they currently receive.
2. Can I still work and receive Social Security benefits?
Yes, you can continue to work while receiving Social Security benefits. However, if you are under the full retirement age (FRA), your benefits will be reduced if you earn above the annual earnings limit ($21,240 for 2024). Once you reach FRA, there are no earnings limits.
3. What happens if I earn more than the taxable income limit?
If you earn more than the maximum taxable earnings limit ($169,200 in 2024), you will pay additional Social Security taxes. This doesn’t directly affect your Social Security benefits but contributes to the overall funding of the system.
4. When can I start receiving full Social Security benefits?
If you were born in 1960 or later, your full retirement age (FRA) is 67. You can start claiming Social Security benefits as early as age 62, but your monthly payments will be reduced if you claim before your FRA.
5. How can I check my Social Security benefits?
You can log into your My Social Security account on the SSA website to check your benefits, request a replacement card, and track your earnings history.
