Social Security: 2024 Changes Impact Recipients

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Social Security is a very lucrative program, you can always look forward to different changes implemented just about every year. That’s the case in 2024, as well. One of the biggest changes affecting benefits this year is a cost-of-living adjustment (COLA), but it’s not the only one.

New COLA

According to the Social Security Administration, “This year’s 3.2% cost-of-living adjustment pushed the average Social Security retirement check to $1,864.52 a month as of March 2024.”The 2024 COLA is a decline 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, but it varies depending on factors such as your type of benefit and when you claimed it.

Spousal Benefits

For couples, the Social Security spousal rule that has been around for years officially ends this year for everyone except those who turned 70 on Jan. 1, 2024. The rule has allowed recipients to switch between their benefits and their spouses to receive the maximum amount. If you were born before Jan. 1, 1954, you will not be able to take advantage.

The expired rule, allowed the higher-earning spouse would claim spousal benefits at full retirement age while the other spouse claimed their own benefit. The higher earner would then switch to their benefits at age 70, which maximizes the monthly Social Security payment because of the delayed retirement credits.

Higher Earnings Test

Seniors who keep working after filing for Social Security retirement benefits are subject to an earnings test for making a certain amount of money in a given year. According to the Social Security Administration, “Earnings exempt from the test increased to $22,320 in 2024 from $21,240 the year before.” So, what does this mean? For every $2 in earnings above that limit, $1 in benefits will be withheld. When you reach full retirement age, this rule no longer applies to you.

Taxes on Higher Income

The maximum amount of earnings subject to the Social Security payroll tax increased to $168,600 in 2024 from $160,200 in 2023. Wealthy Americans have already felt the impact because they have crossed the threshold,m. This does not negatively impact benefits. It does affect how much money workers will have in net income in 2024.

Overpayments

The Social Security Administration suffered major blows from the way it handled overpayments last year. The SSA recently tweaked the rules. Here are three ways to simplify overpayments and help Social Security recipients save money:

A. Lower repayment:

As of March 25, the SSA will collect the greater of $10 or 10% of the beneficiary’s total monthly Social Security benefit to recover an overpayment. That’s down from 100% previously.

B. Longer recovery period:

If a beneficiary asks for a rate lower than 10%, the SSA will approve the request as long as the new rate will pay back the overpayment within 60 months, up from 36 months before the changes.

C. Simpler appeal process:

If a Social Security recipient believes the overpayment was not their fault and they’re unable to repay it, they have the right to appeal the overpayment decision, or the amount and ask the SSA to waive collection.

State Income Taxes

Did you know only 10 states now tax Social Security benefits? Missouri and Nebraska both ended state income taxes on Social Security benefits effective Jan. 1. These new policies are expected to save beneficiaries up to $309 million a year in Missouri and $17 million a year in Nebraska. Now, this does not directly impact benefits but can lead to tax savings.