4 biggest Social Security changes for 2024 and how they could affect you
Social Security beneficiaries could be affected by new plans that will be put in place to avoid running out of funds. These are the most important changes.
Every month, the Social Security Administration issues millions of payments to its beneficiaries, most of them retired workers or people with disabilities or limited resources.
Some monthly insurance payments are made possible thanks to the Old Age, Survivors and Disability Insurance Trust. However, this could run out of funds between 2033 and 2035, which would have effects on all beneficiaries, since it is projected that by 2033 benefits would be cut by up to 24 percent, according to experts on the subject.
In order to avoid a catastrophe and to ensure that there are no losses of purchasing power for those who receive monthly SSA payments, President Joe Biden has a plan to bolster OASDI funds. However, when it comes to initiatives to raise funds, it will imply changes in other aspects as well.
Here are the most important changes and how they will affect you.
The 4 biggest Social Security changes for 2024 and how they will affect you
Increases in the COLA
As is customary, year on year SSA makes a cost-of-living adjustment based on the Consumer Price Index for Salaried Urban Workers and Clerical Workers beginning in the third quarter of the prior year to the third quarter of the current year. With this, the Administration ensures that payments match current inflation and avoid purchasing losses for the beneficiaries.
However, with the new plan, the COLA increase will be based on the Consumer Price Index for the Elderly, which has a more specific approach when measuring the needs of older adults.
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Payroll tax
This new plan also proposes to increase the cap on payroll taxes and tax income over $400,000. Currently, the law states that only income under $160,200 will be taxed.
Primary Insurance (PIA)
In the same way, there are plans to increase the Primary Insurance limit (PIA) which is a measure that serves to indicate how much money the beneficiary in question will receive, based on the age at which they claimed the payments of the insurance as well as average indexed earnings. The White House intends to make the PIA increase by one percent each year, until reaching a cumulative one hundred percent. In this way the PIA would go from 78 to 82 years.
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Increase in the minimum benefit for lifetime workers
Low-wage workers get a minimal benefit, no matter how much income they earned while working. By 2023, this amount is $12,402 per year or the equivalent of $1,033 per month. Biden's proposal would increase the minimum benefit to 125 percent of the poverty level, which would mean a monthly increase of $500 for an individual.
President Biden’s plan is still a proposal, so congressional approval is required for the above changes to become a reality.