In 2024, significant changes to Social Security are set to occur, impacting millions of American seniors. These modifications are crucial for retirees who depend on Social Security as a primary income source. According to a Gallup poll, about 88% of retirees see Social Security as a significant or major income source in retirement. However, the Social Security Trustee’s Report predicts the fund’s depletion by 2034, prompting urgent calls for reform in Washington.
Despite the political divide, three key changes to Social Security benefits are anticipated in 2024:
Adjustment of Payment Amounts: Beneficiaries will receive a cost-of-living adjustment (COLA) of 3.2% in 2024, following increases of 8.7% and 5.9% in 2023 and 2022, respectively. While this is a decrease, it reflects a slowing inflation rate, which benefits retirees by reducing the rapid rise in expenses.
Modification of Full Retirement Age (FRA): Due to reforms made 40 years ago, the FRA is gradually increasing. Those born in 1957 will reach FRA at 66 years and 6 months, while those born in 1958 will reach it at 66 years and 8 months. The FRA will eventually stabilize at 67 for those born in 1960 or later. This change affects the amount of benefit a retiree receives, depending on when they claim it.
Changes to the Earnings Test for Early Filers: In 2024, the earnings test limit will increase to $22,320. This means that retirees who work while receiving Social Security will be able to keep more of their benefits. The earnings test reduces benefits for those earning above the limit but treats the reduced benefits as delayed Social Security claims, leading to increased benefits upon reaching FRA.
These changes underscore the importance of staying informed about Social Security, especially for those relying on it for retirement income. The program is under intense scrutiny in Washington, with efforts to prevent its insolvency and future benefit cuts. Understanding these changes and strategies to maximize Social Security benefits is vital for a secure and confident retirement.
For more detailed information and strategies on maximizing your Social Security benefits, you can visit the original article on The Motley Fool website.