9 Biggest Social Security Changes in 2024
If you’ve been collecting Social Security for a few years, you know that change is the one constant with program. Something new hits the Social Security Administration just about every year. It usually involves an annual cost-of-living adjustment (COLA) that raises the benefit amount to help recipients deal with inflation after retirement, but that’s far from the only change in 2024.
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Here’s a look at the nine biggest Social Security changes this year and how they can impact your benefits or general finances.
COLA Increase
This year’s 3.2% cost-of-living adjustment pushed the average Social Security retirement check to $1,864.52 a month as of March 2024, according to the Social Security Administration. The 2024 COLA represents a decline of nearly two-thirds from last year’s adjustment but is still above the 2.6% average over the past couple of decades. All Social Security recipients will feel an impact, though it will vary depending on factors such as your type of benefit and when you claimed it.
Higher Earnings Test
Seniors who keep working after filing for Social Security retirement benefits are subject to an earnings test for making a certain amount of money in a given year. Earnings exempt from the test increased to $22,320 in 2024 from $21,240 the year before. For every $2 in earnings above that limit, $1 in benefits will be withheld. These rules no longer apply when you reach full retirement age.
Increase to Spousal and Disability Benefits
Widowed mothers with two children have seen average benefits increase to $3,653 a month in 2024 from $3,540 in 2023, according to the SSA. For aged widows and widowers living alone, average benefits rose to $1,773 a month from $1,718. For a disabled worker with a spouse and one or more children, the average monthly benefit climbed to $2,720 from $2,636.
Taxes on Higher Income
The maximum amount of earnings subject to the Social Security payroll tax increased to $168,600 in 2024 from $160,200 in 2023, which mainly impacts people with high salaries. Workers pay a 7.65% FICA tax from their paychecks, with 6.2% of that going to Social Security. About 6% of workers who pay Social Security taxes have earnings above the taxable maximum each year.
New Overpayment Policy
After getting blowback last year for the way it handled overpayments to Social Security beneficiaries, the SSA recently tweaked the rules. Here are three ways the agency aims to simplify overpayments and help Social Security recipients save money:
Lower repayment. As of March 25, the SSA will collect the greater of $10 or 10% of the beneficiary’s total monthly Social Security benefit to recover an overpayment. That’s way down from 100% previously. There will be some exceptions, such as when an overpayment resulted from fraud.
Longer recovery period: If a beneficiary asks for a rate lower than 10%, the SSA will approve the request as long as the new rate will pay back the overpayment within 60 months, up from 36 months before the changes.
Simpler appeal process: If a Social Security recipient believes the overpayment was not their fault and they’re unable to repay it, they may appeal the overpayment decision and/or the amount and ask the SSA to waive collection. “The agency does not pursue recoveries while an initial appeal or waiver is pending,” the press released noted. The SSA has also introduced new, more affordable repayment options.
State Income Taxes
Only 10 states now tax Social Security benefits, which is down from 12 states a year ago. Missouri and Nebraska both ended state income taxes on Social Security benefits effective Jan. 1. The new policies are expected to save beneficiaries up to $309 million a year in Missouri and $17 million a year in Nebraska. Again, this doesn’t directly impact benefits but can lead to tax savings.
Maximum Social Security Benefit Increase
The maximum Social Security benefit for workers retiring at full retirement age increased to $3,822 in 2024 from $3,627 in 2023. This affects only those who claim benefits at FRA, which is currently either 66 or 67, depending on your birth year. Those who claim benefits earlier receive smaller monthly payments.
Higher SSI Payment Standards
For individuals who receive Supplemental Security Income (SSI) benefits in addition to Social Security, the SSI Federal Payment Standard is now $943 a month vs. $914 in 2023. For couples, the standard rose to $1,415 a month from $1,371 last year.
New Spousal Benefit Rule
A Social Security spousal rule that has been around for decades officially ends this year for everyone except those who turned 70 on Jan. 1, 2024. The rule allows recipients to switch between their benefits and their spouse’s to receive the maximum amount. But unless you were born before Jan. 1, 1954, you won’t be able to take advantage.
Under the expired rule, the higher-earning spouse claimed spousal benefits at full retirement age while the other spouse claimed their own benefit. The higher earner then switched to their benefits at age 70, which maximized the monthly Social Security payment because of the delayed retirement credits. In addition, the lower-earning spouse then claimed a spousal benefit or kept their own, depending on which was higher.
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This article originally appeared on GOBankingRates.com: 9 Biggest Social Security Changes in 2024
