Social Security All Changes In 2024: Know Key Updates You Need to Know

Social Security is a crucial source of income for millions of Americans, particularly for those aged 65 and older. In fact, for many retirees, it accounts for a significant portion of their income.

With 90% or more of income coming from Social Security for 12% of men and 15% of women over 65, it’s important to stay updated on how the system changes each year.

For 2024, there are several important changes, including cost of living adjustments (COLA) and updates to earnings limits.

Here’s a breakdown of the most important changes to Social Security for 2024:

1. COLA Increase for 2024: 3.2%

One of the most anticipated changes every year is the cost of living adjustment (COLA). COLA is designed to help beneficiaries keep up with inflation by increasing Social Security benefits. For 2024, the COLA increase is set at 3.2%. While this is lower than the 8.7% increase in 2023, it still provides a helpful boost to beneficiaries’ monthly payments.

Historical COLA Increases:

Year	COLA Increase
2015	1.7%
2016	0%
2017	0.3%
2018	2%
2019	2.8%
2020	1.6%
2021	1.3%
2022	5.9%
2023	8.7%
2024	3.2%

This COLA increase translates into an additional $60 monthly for the average Social Security recipient, or about $720 annually. For those who wait until age 70 to claim benefits, the COLA adjustments can add significantly more.

2. Earnings Limit to Increase

Social Security places a limit on how much you can earn while collecting benefits before reaching full retirement age (FRA). This is known as the earnings-test limit.

For 2024, the limit is $22,320. If you earn more than this and haven’t yet reached your FRA, $1 will be deducted from your Social Security payments for every $2 you earn over the limit.

For those reaching full retirement age in 2024, the earnings limit rises to $59,520, and $1 is deducted for every $3 over the limit. However, once you reach full retirement age, your benefits are recalculated to account for any previous reductions due to earning over the limit.

3. Maximum Taxable Earnings to Rise

Each year, there is a cap on the amount of income subject to Social Security taxes. In 2024, this limit is $168,600, meaning any earnings over this amount are not taxed for Social Security purposes.

This threshold will increase in 2025, with the new figure likely to be announced in October 2024.

This change means that those earning more than $168,600 will still pay the same amount of Social Security tax as someone making significantly more, a point of contention for those advocating to raise or remove the earnings cap altogether.

4. Maximum Monthly Benefit to Increase

For those who wait until their full retirement age to claim benefits, the maximum possible monthly benefit in 2024 is $3,822.

This figure will increase slightly in 2025. Delaying retirement until age 70 increases this benefit even further, but reaching the maximum benefit amount requires earning a high salary for 35 years.

5. Social Security State Tax Exemptions Expanding

Many states are moving to exempt Social Security income from state taxes. As of 2024, 41 states and the District of Columbia do not tax Social Security benefits. Recent additions to this list include Kansas, Missouri, and Nevada.

More states are expected to follow suit in the coming years, reducing the tax burden for retirees and ensuring that more of their Social Security income stays in their pockets.

Additional Changes to Watch in 2024

Waiting to Claim Social Security for Maximum Benefit

For those looking to get the maximum benefit from Social Security, it’s best to wait until age 70 to start receiving payments.

This strategy increases your monthly payment and means each COLA adjustment adds even more value. For example, a 3% COLA increase on a $2,500 monthly benefit results in an additional $75 per month, compared to $60 on a $2,000 benefit.

New Proposals to Strengthen Social Security

There has been ongoing discussion about ways to strengthen Social Security, including removing the earnings cap on Social Security taxes. This would require high earners to continue paying into the system on all their income, not just the first $168,600.

Social Security continues to be an essential source of income for millions of Americans, particularly seniors.

With COLA increases, earnings limits, and new state tax exemptions, it’s crucial to stay informed about the latest changes and maximize your benefits.

As 2024 brings several important updates, take the time to review your financial plan and make sure you’re taking full advantage of Social Security.

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