In 2024, there will be three significant changes to the Social Security system that will have an impact on beneficiaries, contributors, and those planning for retirement. Individuals must be aware of these changes and how they may affect their financial well-being.
The first change is an increase in Social Security benefits. Each year, the Social Security Administration adjusts the benefits based on the cost of living. In 2024, there will be a 3.2 percent increase in benefits. As a result, the average monthly benefits for retired workers, currently at $1,840, will go up by $59. However, the exact increase will vary depending on the individual’s specific circumstances and the factors used in calculating their benefits.
The second change pertains to the maximum contribution amount. In 2024, the maximum taxable earnings for Social Security will be increased. This means that individuals who earn above a certain amount will contribute more towards Social Security taxes. Currently set at $160,200, it will increase to $168,600. This means that high earners will be required to pay more in Social Security taxes. The payroll tax rate for Social Security is 6.2 percent, and this increase in the maximum taxable earnings will result in an additional $520.80 in taxes for those at the top end of the income scale. Their maximum Social Security tax bill will amount to $10,453.20.
The third change concerns the age at which individuals can claim full Social Security benefits. Currently, individuals can begin claiming benefits at the age of 62. However, claiming benefits at this age means receiving reduced monthly payments compared to what they would receive if they waited until their full retirement age. The full retirement age is gradually increasing, and in 2024, only individuals born in the first three months of 1958 will qualify for the full retirement age of 66 and 8 months. Did you know that the full retirement age is gradually increasing to 67 for individuals born in 1960? It’s important to plan ahead and consider how this will impact your retirement.
For those who are not yet ready to retire, there is a way to increase their maximum Social Security benefits. By continuing to work until the age of 70, individuals can receive higher monthly payments when they do decide to retire.
These changes have been implemented to address concerns about the long-term sustainability of the Social Security system and to adjust for inflation. It is important for current and future beneficiaries, contributors, and those planning for retirement to understand these changes and consider their potential impact on their financial situations.
Every year, you should verify the changes occurring. Don’t miss out on the benefits you’ve earned – stay informed and make the necessary preparations for a secure and comfortable retirement.