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Biggest Social Security Changes for 2024: Are You Prepared?

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Social Security is a massive program that serves as a lifeline for millions of Americans. So, even a minute change to the program or its rules can have a significant impact on the lives of those who depend solely or majorly on their monthly Social Security checks. Thus, beneficiaries should be aware of those changes. Knowing about changes beforehand could help beneficiaries better prepare or plan for those changes. To help beneficiaries, this article discusses the biggest Social Security changes for 2024. 

Biggest Social Security changes for 2024

The Social Security Administration (SSA) implements changes every year, which may increase or decrease the monthly checks for beneficiaries. Following are the biggest Social Security changes for 2024:

COLA Increase

The SSA announced the COLA (Cost of Living Adjustments) of 3.2% for 2024. This COLA adjustment helps benefits keep pace with inflation. Although the 2024 COLA adjustment is almost two-thirds less than last year, it is still well above the 2.6% average over the past couple of decades.

All beneficiaries are affected by the COLA adjustment depending on numerous factors, such as type of benefit, time of claim, etc.

Increase in maximum benefit

In 2024, the maximum benefit that a person receives at full retirement age (FRA) has been increased to $3,822, compared to $3,627 in 2023. It must be noted that this change primarily affects those who claim benefits at FRA, which is 66 or 67 years, depending on the claimants’ birth year.

Change to spousal benefits

2024 marks the end (not for all) of a Social Security spousal rule that beneficiaries have taken advantage of for decades. Now, recipients won’t be allowed to switch between their or their spouse’s benefits to choose the maximum amount. The new rule, however, won’t apply to those born before Jan. 1, 1954.

The expired rule allowed the higher-earning spouse to maximize the monthly Social Security payment by claiming spousal benefits at full retirement age (other spouse claims their own benefit) and then switching to their own benefits at age 70. Now, couples won’t be able to benefit from this rule unless they were born before Jan. 1, 1954.

Increase in disability benefits

SSDI (Social Security Disability Insurance) offers benefits to those who can no longer work due to a disability. In 2024, the SSDI benefit increased by 3.2%. Now, disabled workers, on average, could get $1,537 per month, compared to $1,489 in 2023. Similarly, disabled workers with a spouse and one or more children could get, on average, $2,720, i.e., $84 more than in 2023.

Also, the amount that disabled workers can earn without losing access to SSDI has been increased. For instance, benefits for non-blind disabled workers have increased from $1,470 per month in 2023 to $1,550 in 2024, while for blind workers, it has increased from $2,460 to $2,590 per month.

Changes to overpayment rules

After facing severe criticism over the handling of overpayments, the SSA made positive changes to its rules this year. The SSA made three big changes to its overpayment rules.

The SSA will now collect the higher of $10 or 10% of the beneficiary’s total monthly benefit to recover the overpayment, compared to 100% previously. Also, the SSA could approve a rate lower than 10% at the request of the beneficiary, provided the new rate pays back the overpayment within 60 months (36 months previously).

With the new changes, the SSA made the appeal process easier for recipients. If recipients believe the overpayment was not their fault, or they disagree with the amount, they may appeal against the SSA’s decision.

Higher earnings test threshold

Those who continue to work even after claiming Social Security are subject to an earnings test to determine the amount to be withheld. For 2024, earnings exempt from the test increased to $22,320, compared to $21,240 in 2023. The SSA withheld $1 in benefits for every $2 in earnings above the limit.

Though the earnings test doesn’t apply once a person reaches FRA, a different limit does apply in the year a person reaches FRA (up till the month the person reaches FRA). This limit has also increased to $59,520 in 2024, from $56,520 in 2023. The SSA reduces the benefit by $1 for every $3 earned over the limit in the year the claimant reaches FRA.

Increased maximum taxable earnings

In 2023, employees paid 6.2% Social Security tax (12.4% for the self-employed) on income of up to $160,200. There is no change in the Social Security tax, but the maximum income subject to the tax has been increased for 2024 to up to $168,600 (from $160,200 in 2023). Any income above the maximum income is not subject to tax.

Increased earnings limit to earn a credit

Those born in 1929 or later need to earn at least 40 credits (up to four credits a year) over their working life to qualify for Social Security benefits. The amount of earnings to earn a single credit is increased each year. For 2024, a person needs to earn $1,730 to earn a credit, up $90 from last year.

Increase in Medicare Part B Premiums

The Medicare Part B premium increased in 2024 after declining since 2022. For 2024, the Medicare Part B monthly premium, which is determined as per the Social Security Act, increased to $174.70, from $164.90 in 2023. The annual deductible for Medicare Part B has also increased from $226 in 2023 to $240 in 2024.

More states not taxing Social Security benefits

In 2024, only 10 states will tax Social Security benefits, compared to 12 last year. Missouri and Nebraska taxed Social Security benefits last year, but they ended state income taxes on benefits starting Jan. 1, 2024.