It is important to consider your age when starting retirement, as the minimum age to apply for Social Security payments is 62. However, this means getting a lower monthly pensioner’s pension, so not everyone should opt to retire so early.
It is beneficial to wait to apply, as your Social Security pensioner’s pension will increase until age 70, at which point it will no longer grow. In a few years, this increase can reach 24%. Some citizens will have to wait longer.
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If you were born in 1960 or later, the Full Retirement Age is 67. Only those born in the first three months of 1958 can access Full Retirement Age in 2024, having a Full Retirement Age of 66 years and 8 months if they were born in 1958.
A new maximum taxable limit for Social Security will be established in 2024
It is essential to remember that you must comply with the payment of taxes to the government during your working life in order to be eligible for Social Security benefits. Without meeting these attorney obligations, you will not be eligible for retirement benefits and SSDI (disability benefits). Thus, your work history is essential to ensure eligibility and the amount of future monthly payments.
As you contribute to the system through payroll taxes, you accumulate work credits that determine your eligibility for future payments. However, for those with higher incomes, there is a cap on the amount of taxes they must pay.
This limit will increase in 2024, which means that some U.S. workers may see a slight increase in their contributions. 6.2% of earnings up to $168,600 will be the maximum amount a worker must pay in payroll taxes to Social Security in 2024.
In short, those with lower wages will pay less in taxes, but will also get lower future payments. For those earning more than $168,600, no additional tax payments will be required.
This threshold rises from $160,200 in 2023, meaning that some workers could experience an increase of up to $520.80 in their payroll taxes in 2024. While this might not be significant for high-income individuals, for those on tight budgets, it represents an appreciable amount.
Social Security and the COLA increase in 2024
The Social Security Administration (SSA) annually conducts an inflation review to adjust retirement, SSDI and SSI benefits through the Cost of Living Adjustment (COLA).
The COLA seeks to ensure that beneficiaries do not lose purchasing power in the face of inflation, although the 2024 rate of increase of 3.2% may be disappointing to some Americans who find the prices of food, goods and services still high.
While lower than the 8.7% COLA in 2023, the 3.2% increase is still higher than the average COLA over the years. Those who find the COLA insufficient may choose to save these funds. Accumulating these resources throughout the year could result in a solid emergency fund.
On average, Social Security benefits will increase by $50, meaning, for example, that a retiree could get about $58 more per month, while an SSI recipient could get up to an additional $29. The amount of increase depends on the individual benefit, with those who get higher amounts receiving more.