What Are the Major Changes to Expect for Social Security Benefits in 2024?

The changes introduced to social security benefits from time to time are of interest to social security attorneys, the medical review companies assisting them, and the beneficiaries themselves. It is expected that Social Security’s Old Age and Survivors Insurance Trust (OASI) could face depletion by the year 2033. The federal government is expecting to fix the shortage and thereby avoid benefit cuts for retirees and disability beneficiaries. The social security retirement program is dynamic and is constantly changing in keeping with the U.S. inflation rate, longevity and a number of other factors.

Social Security Benefits – What Will Change?

It is estimated that social security beneficiaries may see a much lower COLA or cost-of-living adjustment for the year 2024. According to The Senior Citizens League, a nonpartisan senior group, the COLA for 2024 may be 3%, based on new consumer price index data for June. This estimate is higher than the 2.7% increase for the year 2024 that was projected earlier by the group. At the same time, the Committee for a Responsible Federal Budget issued their COLA estimate which expects an increase in the benefits in the range of 2.6% to 3.3% for the year 2024. This is, provided the recent inflation trends continue. If there is no net inflation for the rest of the year, the rise may be in the range of 2.6%. These values are much lower than the 8.7% COLA increase social security beneficiaries saw in 2023, which was in fact the highest boost in four decades. The year 2022 also had witnessed a record increase of 5.9%. The benefits increased by more than $140 per month on average. The increase applied to approximately 70 million social security beneficiaries (retirees and SSDI beneficiaries) and supplemental security income (SSI) beneficiaries, starting from January this year.

Here is a table that shows the average benefit paid to each group in June 2023. It provides an estimated figure for 2024 based on the forecast 3% COLA.

Thus a 3% COLA increase in 2024 means that the retired worker may receive $55.12 more in monthly benefits. Spouses would receive an additional $26.79 per month, disabled workers would get an additional $44.59 per month, and survivors would receive $43.56 more.

President Biden’s Proposals to Replenish Social Security

finance.yahoo.com recently (August 21, 2023) highlighted President Joe Biden’s four-point plan to reinforce the funds in the social security trust.

1. Change the way COLA increase is calculated: At present, COLA or Cost of Living Allowance is calculated based on the CPI-W or Consumer Index for Urban Wage Earners and Clerical Workers. However, this number does not exactly reflect the lifestyle and expenses of retired people. The proposal to shift COLA calculations to figures tied to the Consumer Price Index for the Elderly may not solve the issue of Social Security. However, it could put more money into the pockets of retired Americans who really need the benefits.
2. Tax income over $400,000: Currently, any earned income less than $160,200 is subjected to a payroll tax of 12.4%. Earnings more than $160,200 are not subjected to OASI (Old Age and Survivors Insurance) Trust Fund taxes. Biden proposes to tax only earned income that is more than $400,000. Wages more than $160,200 up to $400,000 will remain untaxed.
3. Special minimum benefit for lower-wage workers could be increased: Irrespective of how much they earned while they worked, lower-wage workers receive a special minimum benefit. Currently, a lifetime low-wage worker receives around $12,402 in social security benefits annually ($1,033.50 per month). Biden proposes to increase the minimum benefit to 125% of the federal poverty level for an individual.
4. Increase the PIA or Primary Insurance Amount: PIA signifies how much money a person will receive in social security benefits, based on the age he/she begins claiming the benefits and his/her Average Indexed Monthly Earnings (AMIE). If PIA is raised for Americans aged 78 to 82, it could help those who experience increasing expenses such as healthcare expenses, later in life.

Whether these proposals will pass remains to be seen. For any overhaul plan related to Social Security, bi-partisan support is vital.

Social security updates and related proposals and developments are important for beneficiaries, social security attorneys and the medical chart review companies assisting them, and must be carefully taken note of.