June 23, 2024

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Social Security may affect workers in 2024. 3 rules to keep in mind

2 min read

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Social Security beneficiaries stand to get a boost to their benefits next year, based on a 3.2% cost-of-living adjustment.

But there are several thresholds workers should keep in mind, based on new numbers for 2024 that were recently announced by the Social Security Administration.

If you’re a worker who hopes to eventually be eligible for retirement benefits, or you’re working and also receiving retirement benefits, here’s what you need to know.

1. Up to $168,600 in earnings will be taxed for Social Security in 2024

The maximum taxable earnings for Social Security will rise to $168,600 in 2024, up from $160,200 in 2023.

Workers pay a 7.65% tax from their paychecks for Medicare and Social Security, also known as FICA, which stands for the Federal Insurance Contributions Act. Self-employed workers pay 15.3% to cover both worker and employer contributions.

That 7.65% includes 1.45% that goes to Medicare, and which applies to all earnings. Higher earners may pay an additional 0.9%.

The remaining 6.2% is for Social Security and only applies to the taxable maximum, or $168,600 for next year.

Approximately 6% of workers who pay Social Security taxes have earnings above the taxable maximum every year, according to the Social Security Administration.

By paying taxes to Social Security, you may eventually receive benefits in retirement.

Generally, you need at least 10 years of work, or 40 credits, to qualify. You may earn up to four credits per year.

The amount of earnings required for a Social Security credit will be $1,730 in 2024, up from $1,640 in 2023.

2. Some Social Security beneficiaries who work will face an earnings test

If you claim Social Security between age 62 and your full retirement age, your benefits will be reduced for starting early.

If you also continue to work, you may be subject to what is known as the retirement earnings test if you earn over a certain threshold.

In 2024, the earnings exempt from the retirement earnings test will go…

2023-10-21 08:00:00

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