7 Social Security Changes for 2024

The 3.2% COLA for 2024 reflects a drop in inflation

Reviewed by Charlene RhinehartFact checked by Rebecca McClay

Every October, the U.S. Social Security Administration (SSA) announces its annual changes to the Social Security program for the following year. For 2024, the changes consist of a 3.2% cost-of-living adjustment (COLA) to the monthly benefit amount, an increase in the maximum earnings subject to the Social Security tax, a rise in disability benefits, and more.

Key Takeaways

• Those who get Social Security received a 3.2% raise in 2024.
• Social Security tax rates for 2024 are 6.2% for employees and 12.4% for the self-employed.
• In 2024, it takes $1,730 to earn a Social Security credit.

1. COLA Increase

More than 71 million Social Security recipients received a cost-of-living adjustment (COLA) increase to their monthly benefits of 3.2% in 2024.The adjustment helps benefits keep pace with inflation and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) calculated by the U.S. Bureau of Labor Statistics (BLS).

Important

Based on the increase for 2024, the average monthly benefit for all retired workers is $1,907, up from $1,848.

2. Higher Maximum Monthly Payout

The earliest individuals can claim Social Security retirement benefits is age 62. However, claiming before full (or normal) retirement age will result in a permanently reduced payout.Those who delay Social Security past full retirement age can collect more than their full, or normal, payout. In 2024, the maximum payout of a worker retiring at full retirement age is $3,822.

In 1983, Congress passed a law increasing the full retirement age by two months each year from 2000 to 2022, until it hit 67. In 2024, anyone born in 1960 or later will not reach full retirement age until they are 67.

Individuals can earn an additional 8% of their benefit per year up until age 70 by delaying retirement.

3. Earnings Limits Increased

For recipients who work while collecting Social Security benefits, all or part of their benefits may be temporarily withheld, depending on how much they earn. Before reaching full retirement age, recipients can earn up to $22,320 in 2024. After that, $1 will be deducted from their payment for every $2 that exceeds the limit.

Individuals who reach full retirement age in 2024 can earn $59,520, up $3,000 from the 2023 limit of $56,520. For every $3 you earn over the limit, your Social Security benefits will be reduced by $1 for money earned in the months before full retirement age. Once full retirement age is reached, no benefits will be withheld if recipients continue to work.

4. Taxable Earnings Rose

Employees paid the 6.2% Social Security tax, with their employer matching that payment, on income of up to $160,200 in 2023. In 2024, the maximum taxable earnings increased to $168,600. The Social Security tax rate remains at 6.2% and 12.4% for the self-employed.

5. Disability Benefits and Income Thresholds Increased

Social Security Disability Insurance (SSDI) provides income for those who can no longer work due to a disability. More than 8.9 million people in the United States who receive Social Security disability benefits received a 3.2% increase in 2024.

Disabled workers receive on average $1,537 per month in 2024, up from $1,489 in 2023. Disabled workers with a spouse and one or more children can expect an average of $2,720.Blind workers have a cap of $2,590 per month in 2024.

6. Higher Credit Earning Threshold

Those born in 1929 or later must earn at least 40 credits (maximum of four per year) over their working life to qualify for Social Security benefits. The amount it takes to earn a single credit goes up each year.For 2024, it will take $1,730 in earnings per credit.

Note

The number of credits needed for SSDI depends on the age when the recipient becomes disabled.

7. Increase in Medicare Part B Premiums

Premiums for Medicare Part B, determined according to the Social Security Act, rose in 2024. The standard monthly premium for Medicare Part B is $174.70 for 2024, up from $164.90 in 2023. The annual deductible for Medicare Part B is $240 in 2024.

Program Funding Through 2035

According to the 2024 Social Security and Medicare Boards of Trustees annual report, Social Security and Medicare programs face future financing issues. The Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund are combined to create the OASDI, used to indicate the status of the Social Security program.

As of 2024, OASDI is projected to pay 100% of total scheduled benefits until 2035, At that point, the projected fund’s reserves will be depleted and the continuing total fund income will pay 83% of expected benefits.

The Old-Age and Survivors Insurance (OASI) Trust Fund is projected to pay 100% of scheduled benefits until 2033. The fund’s reserves will be depleted and continuing program income will be able to pay 79% of benefits. The Disability Insurance (DI) Trust Fund is projected to support 100% of benefits through 2098.

What Is the Highest Social Security Benefit in 2024?

The maximum Social Security benefit for a worker retiring at full retirement age in 2024 is $3,822 monthly. Individuals can check their full retirement age on the Social Security Administration’s Retirement Age Calculator.

What Is the Cost-of-Living Adjustment (COLA) for the Military in 2024?

Cost-of-living adjustments (COLAs) for pay for retired military members increased to 3.2% in 2024, depending on the time of retirement.

Can a Divorced Person Collect Their Ex-Spouse’s Social Security?

Individuals who divorced but were married to a spouse for more than 10 years can likely claim some portion of their spouse’s Social Security benefits. They must be unmarried when collecting Social Security benefits. The widow’s benefit is 71% to 100% of what a spouse received before they died.

The Bottom Line

Social Security benefits increased in 2024 with a COLA based on inflation. The ideal time to take retirement benefits depends on an individual’s financial situation and retirement goals.

Read the original article on Investopedia.