Because Social Security has been around for so many years, you may be inclined to assume that the program doesn't really change from one year to the next. But actually, there have been a lot of big changes to take place with Social Security in 2024. Here are a few items of importance to keep in mind, as they might impact you even if you're not yet receiving benefits from the program.
1. Benefits have gone up
Each year, Social Security benefits are eligible for a cost-of-living adjustment, or COLA, the purpose of which is to help recipients maintain their buying power as inflation drives the cost of living up. In 2024, Social Security recipients got a 3.2% COLA.
That's considerably smaller than the 8.7% COLA that came through in 2023. However, it's also a sign that inflation has cooled over the past year.
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2. There's a higher earnings-test limit
Social Security recipients are allowed to earn money from a job. Once full retirement age (FRA) arrives, you can earn any amount of money without risking having Social Security income withheld. But if you work and receive benefits prior to reaching FRA, you're subject to an annual earnings-test limit.
This year, the earnings-test limit is $22,320, up from $21,240 in 2023. Beyond that, you'll have $1 in Social Security withheld per $2 of job-related earnings.
The earnings-test limit is also higher for workers who are reaching FRA at some point in 2024 but have not gotten there yet. In that case, the limit is $59,520, up from $56,520 in 2023. Beyond that, you'll have $1 in Social Security withheld per $3 of job-related earnings.
You should also know that Social Security benefits that are withheld under the earnings-test limit are not forfeited permanently. They're added back into your monthly payments once you reach FRA.
3. More wages are being taxed to fund the program
Workers don't pay Social Security taxes on all of their income, necessarily. Each year, there's a cap put in place that determines how much income is taxed to fund Social Security.
This year, the wage cap is $168,600, up from $160,200 in 2023. So, all told, higher earners are losing a bit more of their earnings.
4. It takes more earnings to qualify for benefits
Social Security eligibility is not guaranteed. To qualify for benefits in retirement, you need to accrue 40 work credits in your lifetime, at a maximum of four credits per year.
In 2024, it takes $1,730 in earnings to qualify for a single Social Security work credit, up from $1,640 in 2023. If you're a part-time worker, be mindful of that threshold if collecting Social Security in the future is important to you.
There's a lot to know about how Social Security works in 2024. Clearly, some of the changes that recently came through apply to not just seniors collecting benefits but also workers who may be years away from that point. So basically, no matter what stage of life you're in, it pays to keep tabs on Social Security and be mindful of changes that could impact you financially.
