New year, new financial resolutions, new Social Security information. On January 1, several 2024 Social Security changes are going into effect, which impact what beneficiaries receive and how they qualify.
If you are a beneficiary or are planning to apply this year, there are several key changes to know. Some of these could be happy surprises, like bigger checks, but others could be concerning if they're surprises, like full retirement age stipulations.
Kiplinger covers Social Security all year to keep you up to date, and I'm taking this moment to walk through the most important points to know for the new year.
1. Social Security checks are getting bigger in 2024
Every year, the Social Security Administration (SSA) institutes a cost-of-living adjustment (COLA) so beneficiaries can keep up with costs. It takes into effect the percent change between average prices in the third quarter of the current year with the third quarter of the previous year.
The COLA for 2024 is 3.2%, meaning recipients will see their monthly payments rising by that amount for the new year. On average, that will be a more than $50 monthly increase, per the SSA.
But when will you start getting the Social Security increase? The COLA goes into effect January 1. The 2024 COLA for Supplemental Security Income (SSI) recipients will begin on December 29, 2023, as January 1 is a holiday, the SSA said.
In terms of when exactly you receive your payment, it continues to come down to the date of your birth, following Social Security's regular payment schedule. Generally, if the date of your birth is the first through 10th day of its respective month, you'll get paid on the second Wednesday of the month. If your birthday is the 11th through 20th day of the month, you'll get paid on the third Wednesday. If your birthday is after the 20th day of the month, you'll get paid on the fourth Wednesday.
2. But Social Security taxes are rising in 2024, too
However, some wealthy taxpayers may see higher taxes in the new year, as the Social Security tax wage base in 2024 is rising by 5.2%.
The wage base for 2024 will be $168,600, rising from $160,200. That means you won't have to pay Social Security payroll tax on what you earn over $168,600. The Kiplinger tax team explained: the maximum Social Security tax is jumping from $9,932 to $10,453. So, people making over $168,600 in 2024 will be paying about $521 more in Social Security taxes next year than they would have paid if the wage base remained at $160,200.
Keep in mind that the taxes fund the Social Security program, which provides retirement, disability and survivor benefits to eligible recipients.
3. Some 2024 Social Security qualifiers
There are two checkpoints to keep in mind for 2024: the earnings test and full retirement age.
Let's start with full retirement age. If 2024 is when you were planning to apply for Social Security, be aware of the full retirement age (FRA) rules. Yes, you can start receiving benefits as early as age 62, but you become eligible for full benefits when you reach the FRA, which is determined by your birth year.
If you were born in 1957, you reach FRA at 66 years and 6 months. But if you were born in 1958, you reach FRA at 66 years and 8 months, so you have to wait two more months than if you were born in 1957.
Now, let's get into the Social Security earnings test. This applies if you are below the FRA and still working and earning income while collecting Social Security (it's also one of the reasons most advice suggests waiting till FRA to collect).
Basically, if you are making above a set amount, the SSA will withhold $1 for every $2 above that amount. The earnings test limit in 2024 is $22,320, up from $21,240 in 2023.
Remember that it's just being withheld — when you reach FRA, your checks will account for the withholdings. Additionally, remember that it only accounts for income from work; investment income, for example, and retirement plan payouts don't count for the earnings test.
