These could all work to your benefit.
Social Security has been around for a long time. Because of this, you might assume that there’s no need to keep tabs on the program.
But Social Security’s rules actually tend to change a lot from one year to the next. And while those changes aren’t always so positive in nature, here are three shifts you may be happy with this year.
1. A 3.2% raise
Every year, Social Security benefits are eligible for a cost-of-living adjustment, or COLA, that’s tied to inflation. In 2023, seniors on Social Security saw their benefits increase 8.7%.
This year’s COLA isn’t nearly as large — benefits are getting a 3.2% boost. However, that’s actually a positive thing.
For one thing, it means that inflation is cooling, and that alone could be a source of financial relief for Social Security recipients. A 3.2% COLA is also pretty generous, historically speaking. Over the past decade, seniors on Social Security have seen a COLA as low as 0% (which is as low as things get), and several recent COLAs have come in at below 2%. So a 3.2% bump certainly isn’t one to scoff at. Plus, if inflation continues to cool, that 3.2% raise could give seniors even more buying power.
2. A higher earnings-test limit
Seniors on Social Security are allowed to earn income from a job while also collecting benefits. Anyone who’s reached their full retirement age (FRA) for Social Security can bring home wages of any amount without risking having benefits withheld. But those who are working and collecting Social Security before FRA risk having benefits withheld if their wages exceed the earnings-test limit for the year.
This year, however, that limit is rising. In 2023, the earnings-test limit for workers under FRA was $21,240. This year, it’s $22,320, which means Social Security recipients can earn more money without having it negatively affect their benefits.
These limits do look different for workers who are not yet at FRA, but will be reaching FRA within the calendar year. In 2023, someone working while on Social Security and reaching FRA at some point in the year could earn up to $56,520 without risking having Social Security withheld. This year, that limit has increased to $59,520.
3. A higher maximum monthly benefit
Social Security gets most of its funding from payroll tax revenue. But wages above a certain threshold are exempt from Social Security taxes.
Because of this, there’s a maximum monthly benefit that Social Security will pay. In 2023, that maximum was $3,627. This year, it’s $3,822.
However, these numbers represent the maximum monthly benefit Social Security will pay at FRA. If you delay your filing beyond FRA, you have a chance to score an even higher benefit.
Changes that apply to Social Security aren’t always ones to celebrate. A 0% COLA, for example, is generally something seniors won’t revel in. But the three changes above could definitely work to your advantage if you’re on Social Security or are gearing up to file this year.
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