2024 Social Security’s Revised Policies: Tighter Restrictions Ahead and Changes in Benefits

There are several changes coming to Social Security rules in 2024, including adjustments to the amount of earnings required to earn a work credit. It’s important to stay informed about updates to the program, even if you’re not yet eligible for benefits. These updates may affect you in the future.

It is a common misbelief that many people think they are automatically entitled to Social Security after hitting a specific age. In truth, Social Security is a benefit you have to earn, mainly by contributing through payroll taxes.

Here are some of the changes taking place next year:

#1 Higher earning threshold

To qualify for Social Security benefits after you retire, you must have 40 work credits throughout your career. The maximum number of credits you can collect in a year is four.

Full-time employees typically don’t struggle to earn the required four Social Security credits annually. Considering 40-hour work weeks, a full-time worker can expect to earn about $290 weekly or $14,500 annually, based on the federal minimum wage of $7.25 an hour.

However, to earn the four work credits in 2024, you’d need a total earning of $6,920. So, even those earning minimum wage full-time can still achieve the highest number of work credits. But, part-time workers need to be conscious of their earnings and working hours in 2024, especially if they want to secure consistent Social Security benefits for their post-work years. 

The difference is $90.00 more per credit. Fortunately, all taxable income, including side gigs, counts towards Social Security as long as they’re declared and taxed.

#2 Wage Cap: 

Next year’s Social Security wage cap will increase, resulting in a higher tax burden for higher earners. If you’re worried about not earning the $6,920 required for four work credits, this change won’t affect you. 

#3 The withholding threshold for early filers is increasing.

The retirement earnings test permits the SSA to reduce a portion or all of a retiree’s benefits if their income exceeds certain set limits. These limits vary significantly based on whether you’ll achieve your full retirement age in the following year.

For instance, individuals who file early and won’t reach their full retirement age within the year can see the SSA withhold $1 in benefits for every $2 they earn over $21,240 (averaging $1,770 monthly). In 2024, the limit for those not attaining their full retirement age goes up to $22,320 ($1,860 monthly). This means these early filers can earn slightly more before facing potential reductions in their benefits.

For those early filers who are on track to achieve their full retirement age in 2024, the SSA will deduct $1 in benefits for every $3 they earn over $56,520 (or $4,710 monthly). By 2024, this threshold will increase to $59,520 (or $4,960 monthly).

#4 Income limits for disabled workers are on the rise.

Not only early filers but also workers with disabilities under Social Security will have the leeway to earn more without facing benefit reductions. The nearly 7.5 million workers with disabilities in the program will enjoy a higher monthly income limit next year, ensuring their long-term benefits remain unaffected.

For example, this year, workers with disabilities, excluding those who are blind, can earn up to $1,470 monthly without interrupting their Social Security disability benefits. This earning limit will rise to $1,550 monthly in the following year.

Meanwhile, blind workers with disabilities have a higher income limit set at $2,460 for 2024. Starting in 2024, they can earn up to $2,590 monthly without their disability.

#5 The COLA 

The Social Security Administration announced the 2024 Cost-of-Living-Adjustment (COLA) to adjust benefits for inflation. In 2024, the program’s 66.7 million beneficiaries will receive a 3.2% COLA. While this is less than last year, it is still more than the average annual benefit bump of 2.6% over the past 20 years.