Not only do you need to know the changes if you are on Social Security retirement benefits, but you should also learn about them if you work because they could also affect you.
Those Americans who are working may not be aware of the fact that Social Security brings changes that could be beneficial or not. Do not forget that you will be able to get retirement benefits because you are paying taxes every month.
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Those workers who have never paid taxes to Social Security cannot collect monthly payments in retirement. The more you contribute, the higher your benefits will be too.
The taxable maximum will go up
Not all your earnings may be subject to taxes. That means that if you go over the limit Social Security has set, you will not have to pay more taxes regardless of your income.
For example, if you earn $200,000 per year, you will only have to pay taxes on up to $160,200 in 2023. Due to the COLA increase for the year 2024, this limit has increased considerably.
The new figure for the 2024 taxable maximum will be $168,600 said Social Security. The percentage of the payroll tax is still the same, 6.2%. Then, if you get $168,600 in 2024, you will have to pay to SSA up to $10,453.20.
In 2023, the maximum amount is $9,932.40, so you will have to pay 520.80 dollars extra in 2024. But changes are not over with that, there will also be a boost in monthly payments for all Social Security beneficiaries.
Benefits will increase due to the Social Security COLA boost
As of September 2023, the average retirement benefit is about $1,841. So, if all retired workers get a 3.2% increase, checks can rise by 58 dollars. The thing is not all retirees get the same amount of money.
While very few can get up to $4,555 in 2023, others may get much less. Do not forget that you need to work for at least 35 years. Or else, your Social Security check will get a reduction.
On average beneficiaries will receive about $50. But if you are on SSI, the increase looks a lot smaller. The maximum SSI check is 914 dollars in 2023 and the 2024 COLA will turn it into $943. That means checks will only increase by 29 dollars if you get the maximum amount.
Another important change is the fact that the price of work credit will be higher. By work credits Social Security means earnings. If you have certain earnings, you can get 1 work credit, and up to 4 per year. The price will go up to $1,730, up from $1,640.
Last but not least, some seniors may have to wait longer until they reach full retirement age. That is when they can claim 100 percent of their benefits. As it is increasing to more months, only those born in the 1st 3 months in 1958 can reach Full Retirement Age at 66 and 8 months.