Five changes taking effect in 2024 that could affect Social Security benefits
Social Security is one of the most pressing concerns for voters this November. The trust fund is projected to dry up in about 10 years, yet efforts to reform it have stalled, and neither presidential candidate seems inclined to weigh in. This Washington Examiner series, Social Security Stakes, will examine how we got here, what could be done, and if anybody has the stomach to tackle it.
Social Security benefits are constantly changing with the economy, resulting in several changes this year.
From expected changes such as the cost-of-living adjustment to increased taxes on higher incomes, here are five changes that will occur or already occurred this year.
COLA increase
The annual COLA is based on the consumer price index for urban wage earners and clerical workers, or the CPI-W. After a record-high 8.7% COLA increase in 2023, 2024 saw a much smaller increase, just 3.2%.
The increase is set to lower even further, with 2025 projected to have the lowest percentage increase in four years. According to Kiplinger, next year’s COLA increase is projected to be around 2.57%.
The final COLA increase for next year will be announced in October.
Maximum earnings tax
The Social Security tax limit was increased by 5.2% in 2024, sending the limit from $160,200 in 2023 to $168,600 in 2024.
Income stops being taxed into Social Security once citizens’ earnings exceed a certain amount. The Social Security Administration bases the “wage base” on increases in the national average wage index. Like COLA, it changes every year.
Full retirement age increase
While citizens can retire as early as age 62 to collect Social Security, they must wait several more years in order to receive 100% of benefits. As funds for Social Security run out, the full retirement age has been steadily increasing. The full retirement age differs depending on the year you were born, with those born in 1960 or later now at 67. In contrast, those born from 1943 to 1954 have a full retirement age of 66.
Those born between 1954 and 1960 have a full retirement age of 66 and so many months, gradually increasing until the 67 of 1960 and after.
Expiration of spousal benefits
A long-running rule allowed spouses of Social Security recipients to switch between their spouse’s benefits and their own benefits to maximize their income.
Under the Bipartisan Budget Act of 2015, however, this benefit was given an expiration date of Jan. 1, 2024. Now only those born before Jan. 1, 1954, will be able to take advantage.
Overpayments
Overpayments occur when the SSA accidentally pays recipients more than they’re entitled to, usually due to incomplete information. The SSA will typically notify recipients and give them 30 days to repay the amount. If not paid before then, the agency will collect portions of the ensuing Social Security payments.
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The SSA was criticized for the way it handled overpayments, so it changed the rules in 2024. Repayment amounts are now lower, the recovery period was extended, and the appeals process was simplified.
The biggest change was the repayment recovery rate, which was reduced from 100% to 10%.