Although major structural changes to Social Security retirement benefits are rare — the last time that happened was in the 1980s — you can usually expect smaller changes to take place every year. That’s the case in 2024, with several changes either already in place or being weighed by lawmakers.
The biggest change is a 3.2% cost-of-living adjustment adjustment that went into effect in January. 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 varies depending on factors such as your type of benefit and when you claimed it.
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For Social Security retirement beneficiaries, the 3.2% increase will boost the average monthly payment by $59. Those with long-term disabilities will see an average increase of $48 a month.
Here’s a look at three other changes that could affect Americans before the end of the year.
Taxes on Higher Income
The maximum amount of earnings subject to the Social Security payroll tax rose to $168,600 in 2024 from $160,200 in 2023. Some Americans have already felt the impact, while others will feel it as the year goes on.
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Higher Earnings Test
Seniors who keep working after filing for Social Security retirement benefits are subject to an earnings test for earning 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.
Higher Full Retirement Age
Last summer, the U.S. House Republican Study Committee (RSC) approved a fiscal blueprint that would gradually increase Social Security’s full retirement age to 69 years old for seniors who turn 62 in 2033. The current full retirement age is 66 or 67, depending on your birth year. For all Americans born in 1960 or later, the FRA is 67. Full retirement age is when you are entitled to your full Social Security benefits.
The reforms would be gradually phased in and “affect no senior in or near retirement,” CNBC reported. Ultimately, the goal for the changes is to make Social Security’s retirement trust fund sustainably solvent.
The adjustments Republicans call for reflect longer life expectancies. Technically, this change could happen in 2024, but the odds are infinitesimal. For the FRA to be raised, President Joe Biden would have to sign off on it — and he has shown no inclination whatsoever to do so.
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This article originally appeared on GOBankingRates.com: Social Security 2024: 3 Program Changes That Could Affect Americans Before the End of the Year
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