It's hard to believe, but we're just days away from 2024 and all the major retirement rule changes that come with it. This includes several important Social Security tweaks for workers and beneficiaries alike. Here's a look at five of them and how they could affect you.
1. Benefits are climbing
Social Security beneficiaries will see their January Social Security checks climb by 3.2% thanks to the latest cost-of-living adjustment (COLA). This will give the average retired worker $1,907 per month in 2024, up from $1,848 per month in 2023. Those receiving survivors or spousal benefits will also see their benefits increase.
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2. Workers can earn more before running into the earnings test
The Social Security earnings test withholds money from your checks if you're claiming while under your full retirement age (FRA) and you earn more than a certain amount of money each year. In 2023, you lose $1 for every $2 you earn over $21,240 if you're under your FRA all year. And you lose $1 for every $3 you earn over $56,520 if you reach your FRA this year and hit this amount before your birthday.
In 2024, these thresholds rise to $22,320 and $59,520, respectively. But don't sweat it too much if you think you'll run into the earnings test. Once you reach your FRA, the government will give your checks a boost to account for the money it withheld previously.
3. More income is subject to Social Security taxes
In 2023, the government only taxes the first $160,200 you earn each year. This will climb to $168,600 in 2024. But you probably won't notice a difference. If you're earning less than $160,200, you're already paying Social Security taxes on all your income, and that won't change in 2024.
4. Eligibility requirements are getting a little steeper
You must have at least 40 work credits to claim Social Security retirement benefits on your own work record. The definition of a credit varies by year. In 2023, you earn one credit for every $1,640 you make, up to a maximum of four credits. This will rise to $1,730 per credit in 2024. However, if you've already worked for at least 10 years, you've locked in your eligibility, so you don't have to worry about this.
5. The maximum benefit is rising
The maximum Social Security benefit is also climbing next year from an already-impressive $4,555 per month to $4,873 per month. However, most seniors won't qualify for this. To do this, you must pay the maximum amount of Social Security taxes for at least 35 years, and then you have to delay benefits until 70 when you qualify for your largest possible checks. For most people, it's just not doable.
These changes may not all affect you right now, but it doesn't hurt to keep them in the back of your mind. Changes happen nearly every year, and some of them may become relevant to you in the future.
