The Social Security program undergoes several major revisions each year to ensure benefits align with inflation and wages. The Social Security Administration typically details those revisions in a press release following the publication of September inflation data. This year, the Labor Department will release its September inflation report on Oct. 12, at 8:30 a.m. ET.
Here are five major changes to Social Security that retired workers can expect in 2024.
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1. Workers will need to earn more money to qualify for Social Security
Workers must earn 40 credits to be fully insured under the Social Security program. Anyone who lacks the requisite number of credits cannot receive retirement benefits, nor can their family receive spousal benefits or survivors benefits.
Credits are earned by working and paying Social Security taxes. No more than four credits can be earned per year, and the income amount required to earn a single credit changes annually based on general wage levels. The income threshold is $1,640 in 2023, up from $1,510 in 2022. The threshold will increase again in 2024, meaning workers will need to earn a little more money to qualify for Social Security.
2. Social Security beneficiaries will get a cost-of-living adjustment
Social Security benefits get an annual cost-of-living adjustment (COLA) to help retired workers and other recipients keep up with rising prices across the economy. The COLA for 2024 cannot be finalized without September inflation data, but The Senior Citizens League expects benefit payments to increase 3.2% next year.
In that scenario, the chart below shows how the average monthly Social Security benefit would change between August 2023 and January 2024.
|
Beneficiary Group |
Average Benefit in August 2023 |
Average Benefit in January 2024 |
Difference |
|---|---|---|---|
|
Retired workers |
$1,840.27 |
$1,899.16 |
$58.89 |
|
Spouses |
$889.61 |
$918.08 |
$28.47 |
|
Survivors |
$1,454.48 |
$1,501.02 |
$46.54 |
|
Disabled workers |
$1,486.83 |
$1,534.41 |
$47.58 |
Data source: Social Security Administration. Note: January 2024 dollar totals assume a 3.2% cost-of-living adjustment (COLA).
3. Some workers will owe Social Security tax on more income
Social Security is primarily financed through a payroll tax, but the amount of income subject to taxation is limited under current law. The taxable maximum is modified each year to account for changes in the national average wage index. It increased to $160,200 in 2023, up from $147,000 in 2022.
The Social Security Board of Trustees expects the taxable maximum to reach $167,700 in 2024, but the Social Security Administration will publish the official figure on Oct. 12.
4. The maximum Social Security benefit at full retirement age will increase
The Social Security benefits formula is revised annually to ensure benefit awards keep pace with national wage levels. As a result, the maximum Social Security benefit at full retirement age (FRA) tends to increase each year, and it has risen at roughly 3.6% annually over the last decade.
If next year aligns with the average, the maximum retired-worker benefit at FRA will increase from $3,627 per month in 2023 to $3,758 per month in 2024.
5. Early claimers will be able to earn more income before benefits are withheld
Workers who start Social Security before FRA and continue working will have part of their benefit temporarily withheld if their income exceeds certain limits. Those limits are referred to as the retirement earnings test exempt amounts. The current limits are detailed below:
- The lower limit is $21,240: This figure applies to workers under FRA for the entire year; $1 in Social Security benefits is withheld for every $2 in earnings that exceed $21,240.
- The upper limit is $56,520: This figure applies to workers reaching FRA during the year; $1 in Social Security benefits is withheld for every $3 in earnings that exceed $56,520.
The retirement earnings limits typically increase annually based on changes in the national average wage index. That means workers who claim Social Security early can typically earn a little extra income each year before benefits are withheld. Estimates from the board of trustees put the limits at $22,200 and $59,160 next year, but the Social Security Administration will announce the official amounts on Oct. 12.
