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The year 2024 will bring a lot of visible/invisible changes to Social Security-2024 in the United States. However, there will be four major changes that could affect you personally, whether you have already retired or approaching retirement in near future. In this article, we will discuss in detail all these changes and also how these are going to affect you.

Cost of Living Adjustment (COLA)

Most importantly, the cost of living adjustment will be going up 3.2% in 2024. For instance, if you now receive, $1,000 in Social Security, it is going up to $1,032 in 2024 and you will receive $32 extra in your social security payment. You might think that last year, the cost of living adjustment was 8.7% and now, it’s down to 3.2%. So if I ask you a tricky question that would you rather receive 8.7% or 3.2% in your Social Security cost of living adjustment? Most of you would say, I’d rather have 8.7% because that’s bigger than 3.2%. So, you got an 8.7% increase mainly because of inflation as prices went up 8.7%. So, if you only received Social Security, then you were basically flat for 2023. But for most of you, you had other income than Social Security. And there is a very good chance that income went down, not up. The S&P 500, for example, went down 18.1% in 2022. And the average age-based fund went down between 15 and 18% during the 2022 year. So, if your other investments did poorly while prices were going up, even though you received an 8.7% increase in Social Security net, you went down.

Wage Cap

Next is the wage cap, which is simply the amount of earnings subject to Social Security tax. When you have earnings from work, you contribute 6.2% to Social Security and your employer also contributes 6.2% to Social Security. This means for every $100 that you earn, $12.40 is paid into Social Security. At a few zeros, and this starts to become a big number. For example, if you made $100,000, your combined contribution (yours/your employers) is $12,400 to Social Security. But there is a cap at which point you and your employer stopped contributing to Social Security. In 2023, that was $160,200 and in 2024 it’s $168,600. Anything above $168,600 is no longer subject to Social Security tax. It’s still subject to Medicare tax, but not Social Security tax.

Ben Points

Ben Points uses something called the average index monthly earnings. And all that is your average earnings indexed to today’s dollars over the last 35 years, your best 35 years. What is the average in today’s dollars of all of those earnings? You take that number and you run it through the Ben Points, and that gives you your Social Security payment at full retirement age. If 2024 was the year that you reached full retirement age and you filed for Social Security in 2024, the SSA would give you 90% of the first $1,174 of average indexed monthly earnings, 32% of any amounts from $1,174 to $7,078 of average indexed monthly earnings, and 15% of any amount above $7,078 to the earnings cap.

So, if you earned an average of $14,000 per year in today’s dollars over the last 38 years, which is, approximately the federal poverty line, this translates to an average indexed monthly earnings of $1,167. This would all fall under Ben Point Number One, and the recipient would receive 90% of the $1,167, which is $10,50.30. Now it’s a big percentage of historical earnings, but I think that’s a very small Social Security payment. Now let’s change the fact pattern, and instead of making $14,000 per year, you made $114,000 per year on average in today’s dollars over the last 35 years. $114,000 per year equals $9,500 per month. You would receive 90% of the first $1,174. That’s $10,56.60. You’d receive 32% of the amount between $1,174 and $7,078. That’s $1,889.28, and you receive 15% of the difference between $9,500 and $7,078. That’s $363.30. So, your total payment at full retirement age would be $3,309.18. Contribution to Social Security Even though you contributed the exact same percentage, 6.2% of your earnings and your employer matched 6.2% of your earnings, or a total of 12.4% on your $114,000, you receive 34.83% of your average indexed monthly earnings, whereas the low income earner gets 90%. Many people, would say that this is entirely fair because Social Security is therefore the most vulnerable, and those who are low income earners their entire life going into retirement are far more vulnerable financially than big earners that have had 35 years of good earnings growth.

Debatable Issue

But, the most debatable issue is whether or not the cap should be lifted altogether and 15% reduced again to another tier or even to zero to continue to return for the excess contribution. This is a complex issue and we will discuss it in some other article later.

Earning Limit

The earnings limit has gone from $21 ,240 to $22 ,320 for anyone who is not in their full retirement age year. Full retirement age classified by the SSA is between ages 66 and 67 depending on the year that you were born. So, if you’re under full retirement age then you can earn up to $22 ,320 in 2024 without having to give back any of your social security payment. For every $2 above you have to give back $1 to the SSA. If this is the calendar year that you reach full retirement age but you haven’t reached your birthday yet then you can earn up to $59 ,520 in 2024. That’s up from $56 ,520 in 2023 so it’s $3 ,000 more. For every $3 you earn over this amount you have to return $1 back to the Social Security Administration. Once you reach full retirement age, you can earn as much as you want and you don’t have to give any of your earnings back to the SSA. It’s also worth noting that even though your payment is reduced if you’re working and you exceed these thresholds the SSA gives those back to you once you reach full retirement age in the form of a higher payment.

Work Credit

The next thing in SSA is called a work credit. You need to have 40 quarters of employment to qualify for Social Security. In theory, you could work every other quarter for 20 years and still qualify for Social Security, but you do need to earn a certain minimum. In 2023, that minimum was $1 ,640 per quarter. In 2024, it’s $1 ,730 per quarter. Now here’s an interesting point. No matter how much you earn, you never qualify for more than four quarters in any single year. But if you earn more than the minimum, $1 ,730 in 2024 times four, once you reach that amount, you theoretically could stop working and you still get four quarters for the year. For instance, if you earn $6 ,920 in a seasonal job that ran from say October 24th to December 24th, you would qualify for four quarters. Even though you only worked for two months, you get four quarters of credit for social security. For example, a tax accountant only works from January 1st to April 15th, but he earns a lot of money during that period. You qualify for four quarters if it’s over 69.20 and 20.24. Now, let’s us discuss about what happens if you stop working for a long period of time. This almost always is when someone stays home to raise a family. For most people, 40 quarterly credits is an easy target to achieve, especially if you’re working 30 or 40 years, given the low amount that you need to earn during that time. However, people take off of work, they go home, they raise a family for 10 or 15 or 20 years, even longer if they have multiple children, and sometimes they find themselves unexpectedly up against that 40 -quarter limit with only a few years left to work. Sometimes they miss by one or two quarters simply because they’re not paying attention. It must be noted that if you’re approaching retirement, you should check with the SSA and ask how many quarters of work you have registered, particularly if you stayed home to take care of your family or something else.

Social Security Trust

According to some analysts, the Social Security Trust is due to run out in 2034/2035 depending on which calculation you look at, and there is a politically charged environment as 2024 is an election year.


Q. What is Cost of Living Adjustment (COLA)?

A. A Cost-of-Living is an increase made to your Social Security to counteract the effects of growing inflation.

Q. How Much Social Security Money is Increasing in 2024?

A. There will be a 3.2% increase in your monthly Social Security Benefits beginning in January 2024.

Q. When Will the COLA Increase Take Effect?

A. The increase will begin with benefits that Social Security recipients receive in January 2024 while increased SSI payments start with the December 29, payment.


As inflation soaring, the Social Security Administration (SSA) is increasing the cost of living adjustment (COLA) for 2024. It is one of the major changes Social Security Administration announced recently. According to SSA, there will be 3.2% increase in cost of living adjustment. However, people are not happy over this meagre increase as inflation is skyrocketing, which has badly affected their purchase power. The Social Security Administration has announced a number of changes to Social Security that are going to in effect in 2024. However, in the said article, we discussed in detailed four different major changes to Social Security in 2024 that are going to affect social security recipients.

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