For most people aged 55+, Retirement is something they started planning nearly a decade ago. As inflation lingers, consumer confidence diminishes, and retirement dreams get pushed further away, or is it still possible now? Will these Social Security Changes in 2024 Affect 55+ Retirement? Does your 55+ retirement plan include social security? If your retirement plan includes Social Security, this blog will give you insight into the 6 Big Social Security Changes in 2024 that might affect you and what you need to know.
1. 2024 Social Security Changes Affect 55+ Retirement
2024 is off to a quick start, and this month, the Social Security Administration (SSA) is implementing a 3.2 percent adjustment amounting to a $59.00 monthly benefit increase for the average retired worker on Social Security.
Specifically, the average check for retired workers will increase from $1,848 to $1,907. For a couple with both partners receiving benefits, the estimated payment will increase from $2,939 to $3,033, a rise of $94.
2023 had an 8.7 bump fueled by 2022 high inflation. It was the most significant adjustment in more than 40 years when it took effect in January 2023. Although noticeably lower than 2023, 2024's adjustment is slightly higher than the historical average, which hovers around 2.5 percent a year.
2. Maximum Taxable Earnings Going Up
In 2023, the maximum earnings subject to Social Security taxes was $160,200. Workers paying into the system are taxed on wages up to this amount, typically at the 6.2 percent rate. In 2024, the maximum earnings will increase to $168,600, meaning more of a worker's income will be subject to the tax. This adjustment is due to an increase in average wages in the U.S. Read More about this atÂ
3. Maximum Social Security Benefit Also Set To Increase
As expected, the maximum Social Security benefit for a worker retiring at full retirement age will also increase in 2024 from $3,627 to $3,822. It's important to note that this maximum applies to those retiring at the full retirement age of 67 for anyone born after 1960.
The maximum benefit for those who retire before the full retirement age will be reduced. The same applies to those who retire after the full retirement age, a strategy that can max out your benefit check.
4. Average Benefit For Spouses And Disabled Workers Is Increasing
The average benefit will increase across the board in 2024, including benefits for widows, widowers, and people with disabilities. Here's how those figures break out:
The SSA says the average widowed mother with two children will see an increase from $3,540 to $3,653.
Aged widows and widowers living alone will see their benefits increase from $1,718 to $1,773.
The benefit will increase for a disabled worker with a spouse and one or more children from $2,636 to $2,720.
Of course, those are averages, and individual circumstances will vary.
5. Social Security Adjusts Earnings Test Exempt Amounts
Suppose you claim your retirement benefits before you hit full retirement age. In that case, Social Security will withhold some benefits from your check above certain income levels. The program calls the retirement earnings test exempt amounts, and it can claim a serious chunk of your benefits if you're still working. Here's how it will work in 2024.
If you start collecting Social Security before full retirement age, you can earn up to $1,860 per month ($22,320 per year) in 2024 before the SSA will start withholding benefits at the rate of $1 in benefits for every $2 above the limit. In 2023, the maximum exempt earnings were $1,770 per month ($21,240 per year).
In the year you reach full retirement age, this rule still applies, but only up until the month you hit full retirement age and with much more forgiving terms. In 2024, you can earn up to $4,960 per month ($59,520$ per year) before benefits are withheld, at the rate of $1 in benefits for every $3 earned above the limit (instead of every $2). In 2023, the threshold was $4,710 per month ($56,520 per year).
6. Medicare premium offset
If you are enrolled in Medicare, chances are you have premiums for Part B — the part of the federal health care program that covers doctor visits and other outpatient treatment — deducted directly from your Social Security payments. That means an increase in Medicare premiums can undercut your cost-of-living adjustment.
Beneficiaries got a rare respite from that offset effect in 2023, as the big COLA was accompanied by a drop in Medicare premiums. But the offset is back in 2024, with the standard monthly Part B rate rising from $164.90 to $174.70, shaving about $10 a month off the COLA gain.
Medicare Part B premiums increase
While Social Security and Medicare are different programs, most retirees participate in both, and many have their Medicare Part B premium automatically deducted from their Social Security check.
Monthly Medicare Part B premiums will rise from $164.90 in 2023 to $174.70 in 2024. The annual Part B deductible is increasing also this year, from $226 in 2023 to $240 in 2024, or a $14 increase.Â
Bottom Line 2024 Social Security Changes Affect 55+ Retirement
The 2024 Social Security COLA offers retirees and others a better-than-average benefit boost as inflation lingers. But that's not the only change to the program, as other levels and thresholds have been adjusted to account for ongoing inflation, too.Â
This blog is for entertainment and should not be considered financial advice. You should always consult a professional financial advisor for professional guidance. Information in this blog is sourced via https://www.ssa.gov and aarp.com websites.
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