Yahoo Finanzas Social Security 2024: 6 Changes That Impact Your Benefits
Social Security is a very fluid program, with some kind of change implemented just about every year. That’s the case in 2024, as well. The biggest change affecting benefits this year is a cost-of-living adjustment (COLA), but it’s not the only one.
See: 8 States To Move to If You Don’t Want To Pay Taxes on Social Security
Find: 6 Unusual Ways To Make Extra Money (That Actually Work)
Here’s a look at six changes that impact your benefits or your finances.
New COLA
This year’s 3.2% cost-of-living adjustment pushed the average Social Security retirement check to $1,864.52 a month as of March 2024, according to the Social Security Administration. The 2024 COLA represents a decline of nearly two-thirds from last year’s adjustment, but is still above the 2.6% average over the past couple of decades. All Social Security recipients will feel an impact, though it varies depending on factors such as your type of benefit and when you claimed it.
Spousal Benefits
A Social Security spousal rule that has been around for decades officially ends this year for everyone except those who turned 70 on Jan. 1, 2024. The rule allows recipients to switch between their benefits and their spouse’s to receive the maximum amount. But unless you were born before Jan. 1, 1954, you won’t be able to take advantage.
Under the expired rule, the higher-earning spouse would claim spousal benefits at full retirement age while the other spouse claims their own benefit. The higher earner would then switch to their benefits at age 70, which maximizes the monthly Social Security payment because of the delayed retirement credits. In addition, the lower-earning spouse would be able to claim a spousal benefit or keep their own, depending on which is higher.
Higher Earnings Test
Seniors who keep working after filing for Social Security retirement benefits are subject to an earnings test for making a certain amount of money in a given year. Earnings exempt from the test increased to $22,320 in 2024 from $21,240 the year before. For every $2 in earnings above that limit, $1 in benefits will be withheld. These rules no longer apply when you reach full retirement age.
Taxes on Higher Income
The maximum amount of earnings subject to the Social Security payroll tax rose to $168,600 in 2024 from $160,200 in 2023. Certain wealthy Americans have already felt the impact because they have crossed the threshold, while others will feel it as the year goes on. While this doesn’t technically impact benefits, it does impact how much income certain workers will net in 2024.
Overpayments
After getting blowback last year for the way it handled overpayments to Social Security beneficiaries, the SSA recently tweaked the rules. Here are three ways the agency aims to simplify overpayments and help Social Security recipients save money:
Lower repayment. As of March 25, the SSA will collect the greater of $10 or 10% of the beneficiary’s total monthly Social Security benefit to recover an overpayment. That’s way down from 100% previously. There will be some exceptions, such as when an overpayment resulted from fraud.
Longer recovery period: If a beneficiary asks for a rate lower than 10%, the SSA will approve the request as long as the new rate will pay back the overpayment within 60 months, up from 36 months before the changes.
Simpler appeal process: If a Social Security recipient believes the overpayment was not their fault and they’re unable to repay it, they may appeal the overpayment decision and/or the amount and ask the SSA to waive collection. “The agency does not pursue recoveries while an initial appeal or waiver is pending,” the press released noted. The SSA has also introduced new, more affordable repayment options.
State Income Taxes
Only 10 states now tax Social Security benefits, which is down from 12 states a year ago. Missouri and Nebraska both ended state income taxes on Social Security benefits effective Jan. 1. The new policies are expected to save beneficiaries up to $309 million a year in Missouri and $17 million a year in Nebraska. Again, this doesn’t directly impact benefits but can lead to tax savings.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Social Security 2024: 6 Changes That Impact Your Benefits
