Essential Social Security Insights for 2024: 4 Key Facts You Need to Know

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Millions of individuals receive Social Security benefits, with many depending on the program for a significant portion or the entirety of their retirement income. 

It is imperative to comprehend the amount one can expect from Social Security, despite the program’s complexity and challenging navigation.

Occasionally, there are certain negative factors that can offset participants’ benefits, impacting them in various ways.

Presented below are four key facts about the changes in Social Security for 2024 and the potential implications for individuals and their families.

Social Security Benefits Receive a 3.2% Increase in 2024

One crucial aspect of Social Security is its annual adjustment of benefits to counteract the effects of inflation. 

This adjustment, known as the cost-of-living adjustment (COLA), is based on changes in prices determined by the Consumer Price Index. 

The average inflation rate measured by this index for the months of July, August, and September was 3.2% higher than the corresponding period in 2022.

For the typical retired worker, this translates to an expected monthly increase of $59 in gross benefits, not accounting for Medicare premiums automatically deducted from many Social Security recipients’ checks. 

Likewise, the average older couple can anticipate a $94 monthly boost, while the average surviving spouse will experience a $55 increase.

Social Security’s Top Benefit Increased for High Earners

Individuals who retire in 2024 and are eligible for the maximum Social Security benefit will receive a higher monthly amount compared to those who retired in 2023. 

For those claiming benefits at age 62 in 2024, the maximum benefit is $2,710, reflecting an increase of $56 from the 2023 maximum. 

Notably, larger gains are observed for those retiring at age 70 in 2024, with the maximum benefit rising by $318 to $4,873. 

This increase underscores the significant impact of inflation over the past three years, contributing to the substantial growth in the maximum benefit amount.

Changes in Full Retirement Age for Some in 2024

Essential-Social-Security-Insights-For-2024-4-Keys-Facts-You-Need-To-Know
Millions of individuals receive Social Security benefits, with many depending on the program for a significant portion or the entirety of their retirement income.

Individuals generally qualify for Social Security benefits at age 62, but opting for benefits before reaching full retirement age (FRA) leads to a reduced monthly payout.

For those born in 1957, FRA is 66 and six months. 

Hence, individuals born from July 1957 to December 1957 will reach FRA in the first half of 2024.

However, those born in 1958 have a higher FRA of 66 and eight months. Consequently, those born between January 1958 and April 1958 will need to wait longer, until between September 2024 and December 2024, to reach their FRA. 

Individuals born in May 1958 or later will have to wait until after 2024 concludes to receive full benefits.

Social Security Payroll Taxes to Increase for High Earners in 2024

Social Security’s primary funding source is payroll taxes, and the maximum wage base subject to these taxes typically increases annually. 

In 2024, payroll taxes will be applied to earnings up to $168,600, reflecting an $8,400 rise from the previous year. 

This adjustment may result in a potential increase in withholding for high-earning employees, amounting to $520.80 and totaling $10,453.20.

Self-employed individuals bear both the 6.2% payroll tax for employees and the corresponding 6.2% tax for employers, leading to a substantial impact.

Payroll taxes for self-employed workers could surge by up to $1,041.60, reaching a maximum of $20,906.40. 

However, individuals earning less than the 2023 wage base of $160,200 will not experience any changes in withholding unless there is an increase in earned income.

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