6 changes to social security that retirees need to know about in 2024

Social Security may seem like an unexciting topic, but unless you’re independently wealthy, you should want to know a lot about it—especially as you get older. Consider this from the Social Security Administration: “Among Social Security beneficiaries age 65 and older, 12% of men and 15% of women rely on Social Security for 90% or more of their income.” And that’s among beneficiaries, too: 37% of men and 42% of women receive at least 50% of their income from Social Security.

The average monthly Social Security benefit was just $1,920 in August, or about $23,000 a year. That’s not much, but it’s an average, since millions receive more. What’s more, benefit checks tend to grow over time, and various rules change as well.

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Here are six recent and upcoming changes you should know about.

1. In 2025, a new COLA indicator will appear

In most years, a cost-of-living adjustment (COLA) is applied to retirement benefits. Here are some recent COLAs:

Year	WHEELS
2024	3.2%
2023	8.7%
2022	5.9%
2021	1.3%
2020	1.6%
2019	2.8%
2018	2%
2017	0.3%
2016	0%
2015	1.7%

Source: Social Security Administration. Chart by author.

These COLAs may seem modest, but even $60 a month is $720 more over the course of a year. The higher benefit continues into future years, and in most years, it increases even more.

What is the COLA for 2025? We’ll find out soon enough. The latest estimate is 2.5% (according to the Senior Citizens League). The actual number should be released on the Social Security Administration’s website on October 10.

Keep in mind that it makes sense for most people to delay taking benefits until age 70 if you want to maximize your total Social Security income. This will also maximize your benefit, so each COLA you receive will bring in more dollars. If you receive $2,000 a month, a 3% increase would mean $60 more, while a 3% increase on a $2,500 benefit would mean $75 more.

2. The earnings test limit increases in 2025.

Another Social Security number that increases in most years is the earnings test limit. This comes into play if you continue working and earning money, collecting Social Security before reaching full retirement age. (That’s 66 or 67 for most people, and 67 for people born in 1960 or later.)

If that’s you, know that there’s a limit to how much you can earn before Social Security starts reducing your benefit. In 2024, Social Security will reduce your monthly benefit by $1 for every $2 you earn above $22,320 — if you don’t reach full retirement age that year. For people who reach full retirement age this year, the threshold is more generous at $59,520, and benefits are reduced by $1 for every $3 you earn above the limit.

Don’t worry too a lot, because Social Security will adjust your future benefits to account for the deduction. So you don’t actually lose money.

3. The salary cap will increase in 2025.

You may not know this, but not all earnings are taxed for Social Security. There is a limit above which earnings are not taxed. The limit is out of reach for most people — for 2024, it is $168,600. This means that someone earning $168,600 and someone earning, say, $33,168,600 would pay the same amount of Social Security tax.

As you might imagine, this seems unfair to many people. Removing the cap is one suggested way to strengthen Social Security (among other things).

The salary cap will likely increase in 2025, with the new amount likely to be announced in October.

4. The maximum Social Security benefit will increase in 2025.

There are many ways to increase your Social Security benefits — but the increases aren’t limitless. There’s a maximum benefit each year, and in 2024 it’s $3,822 a month ($45,864 a year) — for people who receive benefits at full retirement age. In 2025, it’ll be slightly higher.

You can increase your benefits a little by delaying them until age 70, but either way it is very difficult to reach the maximum benefit. Really difficult. Almost impossible.

5. More states may exempt Social Security income from taxation

Here’s an interesting fact: In 2017, 37 states did not tax Social Security benefits for residents. That number is growing, with Kansas, Missouri, and Nevada joining the list in recent years.

At present, 41 states — plus the District of Columbia — do not tax Social Security (although the federal government does). Chances are, there will be 42 or 43 in a few years.

6. The long-term outlook for social security may change

Another set of numbers that often changes for Social Security is its long-term health. According to the 2024 annual report from the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Fund, “reserves will be exhausted in 2035.” That’s a year later than the previous estimate, which is good news.

The problem is simple: As people live longer and often retire earlier, the obligation to retirees will outweigh Social Security’s tax revenues. For a long time, the program has been running surpluses, but those surpluses will run out if changes are not made. But we still have time to make these changes, and there are many changes that can be made.

In the meantime, trustees estimate that if no changes are made, beneficiaries will receive just 83% of what they are owed by 2035. (This is up from the 80% estimated in the 2023 report.)

Here are some important Social Security changes to know and watch for in the coming weeks and years. Make sure you include Social Security in your overall retirement plan.

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