As 2024 has gotten underway, some important Social Security changes have gone into effect. Many people may not have even noticed these changes, but these changes could affect them.
Here's what you need to know about some important ways Social Security is different this year compared with prior years.
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1. Full retirement age has changed
One of the first and most important changes is that full retirement age has shifted. Full retirement age, or FRA, is the age when you're able to claim your standard Social Security check that's not reduced by early filing.
For anyone who turned 66 prior to 2024, full retirement age was between the ages of 65 and the age of 66 and six months. But if you're turning 66 in 2024, your FRA is 66 and eight months. And if you're not hitting this age until 2026, your FRA is going to be 67 (that's the latest FRA you can have, regardless of when you were born).
The fact that FRA has moved later means that anyone who is claiming benefits going forward will need to wait a little longer to get their full monthly payment. Future retirees must know that so they can be prepared to work for some extra time or to accept a reduced retirement benefit.
2. Earning limits have changed
Another change affects current retirees who are trying to work while collecting Social Security benefits. For those in this situation who have not yet reached full retirement age, there are restrictions on what you can earn without seeing your benefit reduced.
If you will not reach FRA the entire year, you can earn up to $22,320 in 2024 without seeing benefits reduced. After that, your Social Security income declines by $1 for each $2 earned. If you'll reach FRA at some point in 2024 but haven't already, you can earn up to $59,520 before seeing benefits reduced by $1 for every $3 above that threshold.
While the decline is temporary and benefits are recalculated at full retirement age to adjust for income missed, losing benefits can still be a burden if you were counting on them. The good news is, these limits are up from $21,240 and $56,520 in 2023. So those trying to get both a paycheck and Social Security can earn more this year without seeing part or all of their Social Security checks temporarily disappear.
3. High earners could pay higher taxes
There's one more big change you may not have noticed yet. The maximum wage subject to Social Security tax has gone up.
In 2023, workers paid Social Security taxes on income up to $160,200. But in 2024, they'll pay taxes on up to $168,600 in earnings. This means high earners with incomes topping $160,200 will be paying more in Social Security tax this year. They'll also get larger future benefits, though, since retirement check amounts are based on the average salary earned over your career -- up to the maximum taxable wage.This maximum exists to prevent very high earners from getting huge benefits.
You may not have noticed these big shifts in Social Security yet, but you should pay attention to them now. They could affect when you claim benefits, how much you can work, and what taxes you may have to pay. These are pretty important financial matters that you definitely should know about.
