Here's the 1 Social Security Change in 2024 That's Going to Hurt the Worst


The only constant in life is change. The Greek philosopher Heraclitus noticed this fact close to 2,500 years ago. And it’s still true today — even with the Social Security program.

Several key adjustments are on the way next year with the popular federal program. Change can be good, but not always. Here’s the one Social Security change in 2024 that’s going to hurt the worst.

Two people with stunned expressions on their faces looking at a laptop.

Image source: Getty Images.

Most upcoming Social Security changes are positive

Before we get to the painful part, it’s important to note that most of the upcoming Social Security changes are positive. For example, all beneficiaries will receive an annual cost-of-living adjustment (COLA) of 3.2%. Although that’s much lower than the 8.7% increase received in 2023, it’s still above average over the last decade.

The maximum retired worker benefit will also be higher. In 2023, the most a person claiming at full retirement age (FRA) could make was $3,627 per month. Next year, the max will increase to $3,822 per month.

There’s also good news for individuals who begin collecting Social Security retirement benefits before reaching their FRA and continue working. The Social Security Administration (SSA) reduces benefits by $1 for every $2 earned above an annual limit. During the year a person reaches their FRA, benefits will be reduced by $1 for every $3 earned above a higher annual limit. This year, the lower annual earnings limit was $21,240 and the higher earnings limit was $56,520. In 2024, those limits will increase to $22,320 and $59,520, respectively.

The earnings limits will also change for individuals with disabilities who receive Social Security benefits and continue working. Non-blind workers with disabilities will be able to make $1,550 per month in 2024 without having their benefits stopped, up from $1,470 per month in 2023. For blind workers with disabilities, the earnings threshold will increase to $2,590 per month in 2024 from $2,460 per month in 2023.

Hurting the worst — but not affecting many

However, there is one notable Social Security change on the way that will hurt the worst. The silver lining, though, is that it won’t affect many Americans.

This year, the Social Security portion of the Federal Insurance Contributions Act (FICA) payroll tax only applies to the first $160,200 of earnings. With this tax rate set at 6.2%, this means that roughly $9,932 of an individual’s wages could be taken by Uncle Sam. Employers pay an equivalent tax, which means that self-employed workers who make $160,200 or more in 2023 will owe nearly $19,865 in Social Security taxes.

In 2024, the payroll tax cap will increase to $168,600 — a 5.2% jump. Some individuals could see the federal government keep an additional $521 or so. Self-employed workers who make at least as much as the threshold will miss out on an extra $1,042 (rounded to the nearest dollar).

The reality, of course, is that most Americans don’t earn anywhere close to $168,600 (or this year’s cap of $160,200, for that matter). The median household income in the U.S. in 2022 was $74,580. This number reflects the most recent data available from the U.S. Census Bureau. Median household income could be higher in 2023 and 2024, but not that much higher.



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