What are the Changes to Social Security in 2024 and how will those changes affect me?

A new year is right around the corner and changes are coming for Americans who receive Social Security benefits. In 2024, at least 71 million Social Security recipients will see a 3.25% increase to their monthly benefits. Each year the Social Security Administration makes an adjustment to Social Security benefits to reflect a rise in the cost of living.

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While this year’s increase is lower than last year’s, a 3.2% increase is still higher than usual as COLA averaged 2.5% per year since the 1990s.

People with disabilities, their spouses and their children, as well as those receiving Social Security Income (SSI) and retirees, will see an increase in their payments. This increase is effective in January 2024 for people receiving Social Security disability income and retirement benefits and begins on December 29, 2023 for those receiving SSI.

Here’s what you need to know:

  New Cost of Living Adjustment (COLA).

The purpose of COLA is to make sure that the purchasing power of Social Security and SSI benefits is not diminished by inflation. Cost of living is based on the Department of Labor’s Consumer Price Index (CPI-W) and determined by taking the average CPI-W reading from the third quarter of the current year (July – September) and comparing it with the CPI-W of the previous year. Inflation rises when CPI-W goes up and prices for goods and services increase. COLA helps offset these costs. If there is no increase in the Consumer Price Index, there is no increase in COLA. The cost-of-living increase in January 2024 is 3.2%.

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  Social Security monthly benefits will increase.

In 2024, disabled workers will see their average monthly SSDI check increase by $48—from $1,489 (2023) to $1,537 (2024), and the average payment for a disabled worker, their spouse, and one or two children is estimated to be $2,720 (up from $2,636). The increase in monthly payments for retirees will depend on whether or not the beneficiary is covered by Medicare and if a monthly premium for Medicare Part B is deducted from their benefit, but the average monthly retirement benefit will increase by $59 a month, from $1,848 to $1,907.

In general:

	Before COLA	After COLA
All retired workers	$1,848.00	$1,907.00
Aged couple, both receiving benefits	$2,939.00	$3,033.00
Widowed mother and two children	$3,540.00	$3,653.00
Aged widow(er) alone	$1,718.00	$1,773.00
Disabled worker, spouse and one or more children	$2,636.00	$2,720.00
All disabled workers	$1,489.00	$1,537.00

Payments to SSI beneficiaries will also rise with the average monthly payment for an individual increasing to $943 per month (up from $914 per month) and $1,415 per month for a couple (up from $1,371 per month).

It’s important to know that SSI beneficiaries’ resource limits (the amount a beneficiary’s countable resources are worth) will not change in 2024, remaining at $2,000 for an individual and $3,000 for a couple.

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  Substantial Gainful Activity (SGA) will increase.

The Social Security Administration updates the monthly earnings threshold known as Substantial Gainful Activity (or SGA) each year. SGA is the amount of monthly income a beneficiary can earn before Social Security benefits will cease and depends on the nature of a person’s disability. In 2023, SGA for a blind person was $2,460 per month; and will increase to $2,590 per month in 2024. In 2024 a nonblind person can earn $1,550 per month (up from $1,470 per month in 2023). The threshold for a Trial Work Period or TWP will also increase. A Trial Work Period is an interval of time where a beneficiary attempts to return to work and earn some income, but may still collect Social Security benefits. The TWP for 2024 is $1,110 per month, an increase from $1,050 per month in 2023.

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  No changes in full retirement age.

Full retirement age or FRA is the age a person is eligible to collect 100% of their monthly Social Security retirement benefit and is determined by birth year. The last increase occurred in 2022 when full retirement age increased from 66 years and 10 months for those born in 1959 and to 67 years for all people born in 1960 or later. Taking retirement before a person reaches FRA will permanently reduce the amount of their monthly retirement benefit, while waiting until FRA may increase the monthly benefit above 100%. FRA is 66 years and 6 months for people born in 1957 and 66 and 8 months for those born in 1958; people born from July 2, 1957, through May 1, 1958, will reach FRA in 2024.

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  The maximum Social Security monthly retirement benefit increases.

Workers who retire at full retirement age will collect a larger retirement benefit in 2024. In 2023, retirement income was capped at $3,627 per month; in 2024, this monthly payment will increase to $3,822 per month, and further increase to $4,873 per month for those who wait until age 70 to begin collecting Social Security retirement benefits.

To receive this maximum payment, a retired worker needs to satisfy three requirements:

1.    They must wait to full retirement age to claim benefits;
2.    They must have worked at least 35 years; and
3.    They must have reached or surpassed the maximum taxable earnings cap in each of the 35 years Social Security uses to calculate an individual’s retirement benefit.

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Every year only roughly 6% of Americans make more than the maximum taxable earnings limit, meaning the vast majority of retired workers will not qualify for the maximum benefit.

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  Amount of earnings subject to Social Security payroll tax increases.

All earned income between $0.01 and $168,600 (up from $160,200 in 2023) will be subject to the Social Security payroll tax of 12.4%. Individuals who are employed split this tax with their employer and pay 6.2% while self-employed individuals are responsible for the full 12.4%. The combined tax rate for Social Security and Medicare taxes is 15.3%; the Medicare portion is 1.4% on all earnings with no limit on earnings.

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  The amount of earnings needed for Social Security credits increases.

To qualify for Social Security benefits, individuals must earn credits by working in a job that withholds Social Security taxes. Social Security bases these “work credits” on the amount an individual earns in any given year, using their earnings and work history to determine eligibility for disability benefits, retirement benefits, and survivor benefits. A person must earn 40 work credits over their lifetime to be eligible for Social Security retirement benefits, with a maximum of 4 work credits per year. Each year the amount of earnings needed for credits increases as average earnings levels increase. In 2024, one work credit will be awarded for every $1,730 (up from $1,640 in 2023); you can earn up to 4 credits per year, equivalent to $6,920 in income in 2024. The number of work credits you need to qualify for disability benefits depends on your age when your disability begins. Generally, a person needs 40 credits, 20 of which were earned in the last 10 years ending with the year your disability began. However, younger applicants may qualify with fewer credits.

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  Retirement earnings test tax exempt amount increases.

Social Security withholds benefits if a beneficiary exceeds a certain income level and if they are under full retirement age. For individuals who are working while collecting Social Security benefits, but are under full retirement age, the income limit for 2024 will be $22,320. This is an increase from $21,240 in 2023. One dollar in benefits will be withheld for every $2.00 in earnings above the limit. For individuals who reach full retirement age in 2024 and continue to work while collecting benefits, the limit is $59,520 per year (up from $56,520 per year). One dollar in benefits will be withheld for every $3 in earnings above the limit.

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  Changes to Medicare premiums and coverage.

Social Security beneficiaries who are enrolled in Medicare will see changes to premiums, coverage, deductibles and coinsurance amounts. Part A premiums will remain at $0 for most beneficiaries because they paid Medicare taxes while working. However, if you didn’t get premium-free Part A, you will pay up to $505 each month. If you don’t buy Part A when you’re first eligible for Medicare, usually when you turn 65, you might pay a penalty. Part B premiums will increase to $174.70 per month (up from $164.90 per month.) The annual deductible will also increase to $240 from $226. Medicare beneficiaries whose income exceeds a certain amount must also pay a surcharge on their Part B premium known as an income-related monthly adjustment amount (IRMAA) ranging from $69.90 to $419.30 (up from $65.90 to $395.60 in 2023). Approximately 8% of Medicare beneficiaries are affected by IRMAA surcharges. The average monthly premium for Medicare Advantage plans is projected to increase by 64 cents in 2024, but officials at the Centers for Medicare & Medicaid Services (CMS) say that nearly 73 percent of enrollees will not see any increase in the monthly charges for their current plan next year. While most Medicare Advantage Plans include Plan D prescription coverage, for those who are not enrolled in those plans, the national average premium for Part D drug coverage in 2024 is expected to increase to $48 (up from $40 in 2023) according to KFF, an independent provider of health policy research.

You will notice a change in your Social Security benefits whether you are retired or a person with a disability.

The Social Security Administration posts updates online for all beneficiaries who have a my Social Security account. You can sign up online to view changes and receive courtesy notifications at https://www.ssa.gov/myaccount.

Author: Attorney Lloyd Bemis has been practicing law for over 35 years. He is Superlawyers rated by Thomson Reuters and is Top AV Preeminent® and Client Champion Gold rated by Martindale Hubbell. Through his extensive litigation Mr. Bemis obtained dual board certifications from the Texas Board of Legal Specialization. Lloyd is admitted to practice in the United States District Court - all Texas Districts and has argued before the U.S. Court of Appeals, Fifth Circuit. Mr. Bemis is a member of the Travis County Bar Association. He has been active in the American Association for Justice and is a past Director of the Capital Area Trial Lawyers Association. Mr. Bemis and all the members of Bemis, Roach & Reed have been active participants in the Travis County Lawyer referral service.