Social Security, a vital government program in the United States, is undergoing significant changes in the upcoming year. These updates will impact everything from payroll tax deductions to retirement benefits. To ensure you are prepared for the new year, here are the key shakeups to watch out for.
1) COLAs
The Social Security Administration (SSA) adjusts the payouts annually to accommodate rising inflation. The cost-of-living adjustment (COLA) for 2024 will be a modest 3.2%, a significant drop from the record-breaking 8.7% in 2024. This adjustment means that the average Social Security payout will increase by about $50, though individual benefits may vary.
2) Disability qualifications
Additionally, there will be changes to the disability benefit qualifications. The earnings threshold for disability benefits will increase in 2024. Non-blind individuals must now earn below $1,550 per month, while blind individuals have a new threshold of $2,590 per month. The trial work period (TWP) limit has also increased to $1,110 per month. These changes aim to support those with disabilities while ensuring the program remains sustainable.
3) SSI
Supplemental Security Income (SSI) benefits will also see a 3.2% increase in line with inflation. Eligible individuals will receive $943 per month, couples will receive $1,415 per month, and essential persons will receive $472 per month. For 2024, the SSI student exclusion is set at $2,290 per month, increasing the opportunity for students to receive support without affecting their eligibility.
4) Social Security Wage Base
The Social Security Wage Base, the limit on earnings subject to payroll taxes, will rise to $168,600 in 2024. This update ensures that the program continues to receive adequate funding from current workers’ payroll taxes.
5) Maximum benefit increase
Moreover, the maximum benefit for those retiring at full retirement age will increase to $3,822 per month in 2024. This adjustment aims to provide increased financial Security to retirees, reflecting the rising cost of living.
6) Changes in earnings limits
Furthermore, the earnings limits for working individuals will change in 2024. For workers younger than full retirement age, the limit is set at $22,320. Those reaching full retirement age will have a higher threshold of $59,520. Once individuals reach full retirement age, there are no income restrictions or payout reductions.
7) Long term sustainability
Finally, Social Security’s long-term future must be considered. As projected by the Congressional Budget Office, the Trust Funds are expected to be depleted by 2033, potentially leading to a 25% reduction in benefits by 2034. Legislative changes may be necessary to secure the system’s sustainability.
As we look ahead to 2024, these adjustments will help ensure the Social Security program meets the evolving needs of the American people. Optimize your retirement planning by staying informed and being prepared for these changes.