Social Security, a crucial source of income for millions of Americans, will experience significant changes in 2024. These revisions, according to recent surveys, are expected to catch many Americans off guard. Given the program’s instrumental role in supporting retirees and future beneficiaries, these upcoming modifications hold substantial implications.
1. Retirement Age Increase: One of the major changes affecting Social Security in 2024 is the increase in the full retirement age. Currently, the full retirement age is 67 for those born in 1960 or later. However, starting in 2024, individuals born in 1960 will have to wait until age 67 and 2 months to receive full benefits. This adjustment is part of a gradual increase that will eventually set the full retirement age at 67 for everyone born in 1960 or later.
2. Adjustments to Social Security Benefits: Another significant modification set to take effect in 2024 relates to the way Social Security benefits are calculated. Currently, the program calculates benefits based on the average wages of a worker’s highest 35 years of earnings. However, starting in 2024, this calculation will be modified. Rather than using the average wages, a different formula will be employed, which may result in lower benefit amounts for some individuals.
3. Taxation on Social Security Benefits: The third change, likely to surprise many Americans, concerns the taxation of Social Security benefits. Currently, up to 85% of an individual’s Social Security income can be subject to federal income tax, depending on their total income. However, starting in 2024, the threshold for taxation will be adjusted, potentially affecting a larger portion of recipients who may need to pay taxes on their benefits.
These forthcoming changes are crucial for Americans to understand, as they can impact retirement plans and financial security. By raising the retirement age, altering benefit calculations, and adjusting taxation thresholds, Social Security aims to address ongoing demographic and economic challenges. It is essential for individuals to stay informed and consider these adjustments when making decisions about retirement planning and financial preparedness.