The U.S. has plenty of great social programs, but you could argue that Social Security is the most crucial. Around 53 million Americans receive Social Security retirement benefits, and for many of them, Social Security is the only or a large part of their retirement income.
Unfortunately, navigating the ins and outs of Social Security isn't always a walk in the park. There are consistent changes that retirees need to keep up with to ensure they're not caught off guard and can properly plan their retirement finances .
If you're receiving or will be receiving benefits in 2024, here are three changes you should know about.
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1. Monthly benefits are higher than in previous years
Inflation has become an expected part of life. Most people can attest to this with just a simple trip to their local convenience store. Luckily, there's the Social Security cost-of-living adjustment ( COLA ).
Social Security adjusts benefits each year to account for inflation and help retirees maintain some of their purchasing power . The amount of the increase (it never decreases) is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a monthly inflation measure that monitors the cost of things like food, housing, and transportation.
To determine the exact amount of the COLA, Social Security averages the CPI-W for the third-quarter months (July, August, and September) and compares it to the previous year's numbers.
The Social Security COLA is 3.2% in 2024. Official COLA data for 2025 won't be released until October, but early estimates predict it will be around 2.6%, according to The Senior Citizens League. That would be the smallest COLA since 2021.
2. You can earn more money while receiving benefits early
You don't have to stop earning income when you claim Social Security benefits; you just need to monitor how much you make if you claim before your full retirement age because you could have some of your benefits withheld.
If you claim benefits early and earn over a certain limit, Social Security will subject you to its retirement earnings test (RET). The good news, though, is that this limit increased for 2024.
If you won't reach your full retirement age this year, the earnings limit is $22,320. Social Security will reduce your monthly benefits by $1 for every $2 you earn over the limit. If you reach your full retirement age this year, the earnings limit is $59,520, with benefits reduced by $1 for every $3 earned above this threshold.
These limits are a step up from 2023, when they were $21,240 and $56,520, respectively.
It's important to note that your benefits aren't permanently lost due to the RET. Once you hit your full retirement age, Social Security recalculates your benefits and slowly adds back the withheld amount.
3. It became harder to qualify for the maximum monthly benefit
To determine your monthly benefit, Social Security uses a formula that considers the 35 years when your earnings were the highest. To qualify for the maximum monthly benefit, you must delay benefits until you turn 70 and earn over the wage base limit for the 35 years used in the calculations.
The wage base limit is the maximum amount of income subject to Social Security taxes each year. Any amount earned over that will be free from Social Security taxes.
In 2024, the wage base limit is $168,600, up from last year's $160,200 limit. This not only means that higher earners will likely pay more in Social Security taxes this year, but it also became harder to qualify for the maximum monthly benefit.
For perspective, imagine you earn $165,000 per year and have plans to receive the maximum benefit. If 2023 is one of the 35 years used to calculate your benefits, you'd be on track. However, if 2024 is one of the years that would be used, you'd automatically become disqualified from receiving the maximum benefit because you're below the $168,600 wage base limit.
Wage base limits often change annually, so make sure you're updated on the amount to know what to expect tax-wise as well as if you're on track to receive the maximum benefit.
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