In recent years, Social Security has undergone several changes affecting recipients in different ways. While some alterations have been positively viewed, like the forthcoming 3.2% increase in benefits for 2024, others might affect recipients negatively. This article will explore two significant Social Security changes expected in 2024 that could potentially hurt recipients financially.
Change #1: Limited Earnings and Labor Force Participation
One aspect of the Social Security system is the maximum taxable earnings limit. This threshold influences both workers paying into the system and future beneficiaries who rely on these funds.
Data from the Social Security Administration shows that the maximum taxable earnings limit will increase from $142,800 in 2023 to an estimated $147,000 in 2024. This means that employees will contribute more towards Social Security next year, leading to higher payroll taxes for both them and their employers. Consequently, affected individuals may experience a decrease in their take-home pay while acquainting themselves with potentially lower employment opportunities due to increased labor costs.
Reduced Employment Opportunities for Older Workers
The rise in taxes paid to the Social Security System, as mentioned above, may force employers to reconsider hiring or retaining older workers. Research indicates that older employees usually have higher wages compared to their younger counterparts, making them more susceptible to the increased tax burden.
Besides, companies may also consider employing less experienced workers as they are exempt from Social Security taxes, provided they earn below the new minimum threshold set at $22,020 in 2024. These factors combined can cause reduced employment opportunities for older workers, adversely affecting their financial stability.
Change #2: The Impact of Delayed Retirement
The second Social Security change that could hurt recipients deals with the retirement age. In 2024, the full retirement age (FRA) will be 67 for those born in 1960 or later, signifying an increase from previous years. While some individuals may choose to keep working and delay claiming Social Security benefits until they reach FRA, others might not have this option due to health concerns, job loss, or other factors limiting their employment opportunities.
Struggling Pensions and Personal Savings
Delaying retirement undoubtedly affects workers' pensions and personal savings, as these sources of income are essential for maintaining one's lifestyle post-retirement. As individuals continue working past the traditional retirement age, they may find their pension and personal savings insufficient to support their needs, ultimately leading to a reduction in retirement security.
This reduction in financial stability can impact retirees' ability to cover necessities like healthcare costs, housing expenses, and other essential living expenditures during their golden years.
A Glimpse into the Future
Although the upcoming 3.2% benefit increase next year is a welcome adjustment, the aforementioned Social Security changes expected in 2024 present some cause for concern for older workers and retirees alike. With limited employment opportunities and delaying retirement becoming more common, many individuals may face financial instability moving forward.
Thus, it is essential for future beneficiaries to understand these changes and analyze their financial situation, preparing accordingly by diversifying their sources of retirement income and staying informed about any further changes to the system in the coming years.