Social Security beneficiaries will receive a 3.2% cost-of-living adjustment (COLA) for 2024. This COLA is based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2022 through the third quarter of 2023. The COLA helps ensure Social Security and Supplemental Security Income (SSI) benefits keep up with inflation. Explore the upcoming ‘COLA 2024 Social Security Changes’ in our article to understand how it affects you or your loved ones.
Tax Rates
The tax rates for Social Security remain unchanged at 7.65% for employees and 15.30% for self-employed individuals in 2024. The 7.65% rate is divided into 6.20% for Social Security (OASDI) and 1.45% for Medicare (HI). High-income individuals earning over $200,000 ($250,000 for joint filers) pay an additional 0.9% in Medicare taxes.
Maximum Taxable Earnings
The maximum amount of earnings subject to Social Security taxes will increase to $168,600 in 2024, up from $160,200 in 2023. All earnings are subject to Medicare taxes with no limit.
Quarter of Coverage
Workers need credit for 4 quarters of coverage to be eligible for Social Security benefits. In 2024, one-quarter of coverage will require earnings of at least $1,730, up from $1,640 in 2023.
Retirement Earnings Test Exempt Amounts
Individuals under full retirement age can earn up to $22,320 annually ($1,860 monthly) without losing benefits in 2024, up from $21,240 ($1,770) in 2023. For the year an individual reaches full retirement age, the limit increases to $59,520 annually ($4,960 monthly), up from $56,520 ($4,710) in 2023.
Social Security Disability Thresholds
The substantial gainful activity (SGA) limit for non-blind disabled individuals will rise to $1,550 monthly in 2024, up from $1,470. For blind individuals, it increases to $2,590, up from $2,460. The trial work period (TWP) limit increases to $1,110 monthly, up from $1,050.
Maximum Social Security Benefit
The maximum possible Social Security benefit for a worker retiring at full retirement age is $3,822 per month in 2024, an increase from $3,627 in 2023. This reflects the 3.2% COLA.
Supplemental Security Income (SSI) Changes
The federal SSI payment standard for individuals rises to $943 monthly in 2024, up from $914. For couples, it increases to $1,415, up from $1,371. The resource limits remain unchanged at $2,000 for individuals and $3,000 for couples.
Student Earned Income Exclusion
For students under age 22, the monthly limit on excludable earnings increases to $2,290 in 2024, up from $2,220. The annual limit rises to $9,230 from $8,950.
Estimated Average Monthly Benefits
The estimated average monthly Social Security benefits payable in January 2024 reflect the 3.2% COLA. This includes $1,907 for all retired workers, up from $1,848.
The Role of COLA in Social Security Benefits
The Cost-of-Living Adjustment (COLA) is a crucial mechanism safeguarding the purchasing power of Social Security and Supplemental Security Income (SSI) benefits against inflation’s erosive impact. Instituted in 1972 under the Social Security Amendments, automatic annual COLAs commenced in 1975, marking a significant shift in benefit adjustments.
The calculation relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), determined by the Bureau of Labor Statistics in the Department of Labor. This index captures the percentage increase in prices from the third quarter of the last COLA determination year to the third quarter of the current year. Should there be no increase, no COLA is applied.
Before the 1975 enactment, special legislation was the sole driver for benefit increases. However, the shift to automatic COLAs transformed the landscape. Tying adjustments to the annual CPI-W increase ensures that Social Security benefits keep pace with inflation, shielding recipients from the diminishing impact of rising prices.
In essence, COLA is a proactive measure, aligning Social Security benefits with the evolving cost of living. This legislative foresight secures financial stability for beneficiaries, affirming that the value of these benefits remains resilient against the erosive force of inflation.
Final Words: COLA 2024 Social Security Changes
these 2024 Social Security changes help ensure benefits keep pace with inflation through the COLA while maintaining program integrity. The adjustments to tax rates, earnings thresholds and benefit amounts help Social Security continue providing crucial income support to millions of retired and disabled Americans.
Are tax rates changing for Social Security in 2024?
No, tax rates remain unchanged at 7.65% for employees, 15.30% for the self-employed. High-income individuals have an additional 0.9% Medicare tax.
What’s the maximum taxable earnings for Social Security in 2024?
The limit rises to $168,600 from $160,200. Medicare taxes apply to all earnings without a cap.
How do the Retirement Earnings Test Exempt Amounts change?
In 2024, individuals under full retirement age can earn up to $22,320 annually without losing benefits, up from $21,240 in 2023.
What’s the substantial gainful activity (SGA) limit for Social Security Disability in 2024?
For non-blind disabled individuals, it increases to $1,550 monthly, and for blind individuals, it rises to $2,590.