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Biggest Social Security Changes for 2024

COLA boosts benefits by 3.2%, but Medicare premiums are also going up

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The cost-of-living adjustment (COLA) gets the headlines, but multiple aspects of Social Security change annually to reflect national trends in prices and wages, affecting the benefits paid to tens of millions of Americans and the taxes paid by nearly all U.S. workers. Here are five important ways Social Security will be different in 2024.

1. COLA benefit boost

Inflation cooled considerably in 2023, but consumer prices still went up, producing a 3.2 percent COLA for Social Security beneficiaries. That will raise the estimated average retirement benefit by $59 a month, from $1,848 to $1,907, starting in January, according to the Social Security Administration (SSA).

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That’s a considerably lower bump than the 2023 COLA of 8.7 percent , which, fueled by red-hot inflation in 2022, was the largest adjustment in more than 40 years when it took effect in January 2023. But in historical terms the 2024 bump is still slightly higher than usual: Since the early ’90s, the COLA has averaged around 2.5 percent a year.

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The maximum benefit for a worker who claims Social Security at full retirement age (FRA) in 2024 will be $3,822 a month, up from $3,627 in 2023. FRA is 66 years and 6 months for people born in 1957 and 66 and 8 months for those born in 1958; people born from July 2, 1957, through May 1, 1958, will reach it in 2024.

The COLA isn’t just for retirees. It increases monthly payments for all types of Social Security and for Supplemental Security Income (SSI), an SSA-administered benefit for very-low-income people who are age 65 and older or are largely unable to work due to blindness or other disability.

2. Medicare premium offset

If you are enrolled in Medicare, chances are you have premiums for Part B — the part of the federal health care program that covers doctor visits and other outpatient treatment — deducted directly from your Social Security payments. That means an increase in Medicare premiums can undercut your cost-of-living adjustment.

Beneficiaries got a rare respite from that offset effect in 2023, as the big COLA was accompanied by a drop in Medicare premiums. But the offset is back in 2024, with the standard monthly Part B rate rising from $164.90 to $174.70, shaving about $10 a month off the COLA gain.

3. Social Security taxes

Social Security benefits are primarily funded by a 12.4 percent tax on most workers’ incomes. If you have a job, you pay half of that rate (via FICA withholding from your paycheck) and your employer covers the rest. If you’re self-employed, you pay both shares as part of your annual tax return.

The rate has been the same since 1990, but the amount of income subject to it changes annually in line with national wage trends. In 2023, you paid Social Security taxes on work income up to $160,200. In 2024, the threshold goes up to $168,600. Earnings above that level are not taxed for the purpose of funding Social Security, nor is any income from investments.


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4. Social Security earnings test

If you collect Social Security and continue to work, a portion of your monthly payment may be temporarily withheld. This earnings test applies to people who collect retirement, survivor or family benefits; have not yet reached full retirement age; and have earnings above a certain level.

The threshold changes annually, tracking national wage trends. In 2024, beneficiaries who will not reach FRA until a later year have $1 withheld from their Social Security payment for every $2 in work income above $22,320 (up from $21,240 in 2023).

For example, if you have a $40,000 job, your benefits for the year would be reduced by $8,840 — half the difference between $22,320 and $40,000.

If you will reach FRA in 2024, Social Security withholds $1 in benefits for every $3 in earnings above $59,520 (up from $56,520 in 2023) until the month when you hit the milestone. At that point, the earnings test expires — there’s no longer any work-related deduction, and the SSA adjusts your benefit upward so that, over time, you recoup the prior withholding.

People receiving Social Security Disability Insurance (SSDI) face different income rules. Because SSDI is intended for people who are largely unable to work for an extended period due to a serious medical condition, you can lose it if your earnings reflect what the SSA calls “substantial gainful activity.

The 2024 threshold for most SSDI beneficiaries is $1,550 a month, up from $1,470 this year. People receiving SSDI on the basis of blindness are subject to a higher income limit: $2,590 a month in the coming year, up from $2,460 in 2023.

5. Qualifying for benefits

You become eligible for retirement benefits by collecting Social Security credits, which you get by doing “covered” work — a job or self-employment in which you pay Social Security taxes on your income. In 2024, you get one credit for earnings of $1,730, $90 more than the 2023 level.

You can earn up to four credits a year, equivalent to $6,920 in work income in 2024. It takes 40 credits, or 10 years of covered work, to qualify for retirement benefits (the 10 years do not need to be consecutive).

You must also compile credits to qualify for SSDI, but the number required can range from six (for a year and a half of work) to 40, depending on how old you are when a medical condition sidelines you from work.

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