Nov 28, 2023
Many Americans rely on their Social Security benefit to help fund their retirement.
But with inflation, cost-of-living adjustments and updates for those with disabilities, how much you earn through Social Security in 2024 is going to change — in some cases for the better.
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For the millions of Americans who receive a monthly check from the Social Security Administration (especially those who solely rely on it during their golden years), the updates coming in 2024 could have a big impact on their entitlements. Here’s what you need to know.
1. A higher cost-of-living adjustment
While cost-of-living adjustments, or COLAs, come annually, they’re typically less than the increase planned for 2024. That’s because next year, the COLA is going up 3.2% (rather than the normal 2.6%).
Recipients can thank persistent inflation for the supersized increase, as the COLA is one of the biggest factors in determining how much recipients get every year.
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2. Full retirement age payouts go up
When you hit full retirement age (FRA), you can receive 100% of your retirement benefits. If you start collecting benefits before your FRA, you’ll receive just a portion of your benefits. Waiting means you could cash out on even more, and how much more you’ll benefit is set to rise next year.
Starting in 2024, recipients can receive as much as $3,822 per month — almost $200 more than what they’re getting right now. How much you get depends on how much you earned during your working years, so not everyone is set to get this amount, but it’s good news for folks who earned a lot before retirement.
3. The more you earn, the more you’ll pay
Starting in 2024, the maximum taxable earnings will be $168,600. The vast majority of Americans earn less than $160,000 so this increase will impact only a small percentage of six-figure workers.
The amount that is taxed on earned income is how the SSA makes the bulk of its money. If you earn more than $168,600, everything you make on top of that amount isn’t subjected to the payroll tax. But keep in mind everything you earn up to that amount is.
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4. Workers with disabilities face higher income thresholds
Social Security doesn’t just pay out retired folks. Millions of Americans collect Social Security disability checks. Both blind and non-blind workers will see their earned income threshold increase.
Blind workers can earn up to $2,590 in 2024 and still receive their regular disability benefits. This year it was capped at $2,460. For non-blind workers, you can earn up to $1,550 a month next year while still collecting Social Security — $80 more than their limit this year.
5. You could face getting taxed on your benefits
The taxation of Social Security benefits in some form has been around for 40 years. However, while the cost of living has dramatically increased since then, the provisions set out decades ago have remained the same.
Which means that as the cost of living adjustment continues to rise, the higher the likelihood that most folks who are collecting Social Security benefits will owe the government a share of their earnings.
And so, as supersized COLAs go through, supersized tax bills may follow.
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Dori Zinn is an award-winning personal finance journalist, focusing on credit and debt, budgeting, investing, fintech, and the intersection of money and mental health. Alongside MoneyWise, her work has been featured in the New York Times, Wall Street Journal, CNN, USA Today, Yahoo, and more. She loves helping people learn about money.
