While not every change coming in the new year is a positive one, these factors are all a plus.
Although Social Security has been around for many decades, the program’s rules aren’t set in stone. Rather, they can change from one year to the next. But that doesn’t mean every Social Security change that comes down the pike is a positive one.
In 2024, it will become harder for workers to qualify for Social Security. That’s because eligibility for benefits hinges on earning a certain number of lifetime work credits. And in 2024, the amount of earnings needed for a single work credit is increasing.
The wage cap for Social Security taxes is also getting a lift in 2024. Higher earners may not like the fact that beginning next year, wages of up to $168,600 will be taxable for Social Security purposes. That’s an increase of $8,400, compared to the $160,200 cap that’s in place for 2023.
But while some of the Social Security changes that are coming in the new year aren’t so great, there are a number of positive changes seniors can gear up for. Here are three you should know about.
1. Benefits are rising by 3.2%
Come January, seniors on Social Security should see their benefits rise by 3.2%. That will take the average monthly benefit of $1,848 up to $1,907.
That increase does not account for an uptick in the cost of Medicare Part B. Part B premiums are rising by about $10 a month. And since those premiums are paid directly out of Social Security benefits among seniors enrolled in both programs, Medicare enrollees on Social Security won’t see quite the same increase to their monthly benefits.
However, not every Social Security recipient is signed up for Medicare. So if you’re not yet old enough for Medicare or have health coverage through an employer, you won’t have to worry about a Part B hike eating into your 2024 raise.
2. The maximum monthly benefit is rising
There’s a maximum monthly benefit Social Security will pay seniors at full retirement age (FRA). In 2023, that maximum benefit is $3,627 a month. Beginning in 2024, that maximum monthly benefit is rising to $3,822.
However, it’s possible to collect an even larger monthly benefit from Social Security. Delaying your filing beyond FRA will result in an 8% boost for each year you hold off, up until the age of 70. So if you’re someone who’s delaying your claim, your monthly payday might end up being even more generous.
3. Seniors can earn more money before having benefits withheld
It’s permissible to earn an income from a job while also receiving monthly benefits from Social Security. Once you reach FRA, you can earn any amount of income — even hundreds of thousands of dollars a year — and not have your benefits affected whatsoever. But if you’re collecting Social Security before having reached FRA, you’ll be subject to an earnings-test limit. And if you exceed it, you’ll risk having some of your benefits withheld.
In 2023, the general earnings-test limit is $21,240, and the limit for seniors reaching FRA this year is $56,520. In 2024, these limits are increasing to $22,320 and $59,520, respectively. So if you’re working and collecting benefits at the same time, you’ll have even more leeway to boost your paycheck without having some of your Social Security withheld.
The Social Security changes that are set to arrive in 2024 may be a mixed bag. But you can take comfort in these three positive changes that are coming in January.
