Social Security Updates for 2024

It should be no surprise that with 10,000 Americans turning 65 every single day (until 2029) that there is a stronger demand than ever among consumers to understand their Social Security benefits. Social Security rules are anything but simple – ultimately requiring individual analysis based on a handful of factors and assumptions to truly identify the “best” way to collect benefits for your situation.

1. Anyone born in 1960 or later has a full retirement age for the purposes of social security at 67. Full retirement age, as a reminder, is the age in which you will receive your full primary insurance amount (PIA). Taking benefits before your full retirement age will result in a reduced benefit, while delaying benefits past your full retirement age will also result in an increased benefit through delayed retirement credits. Today, you are allowed to file as early as 62 (with a reduced benefit) and delay as late as age 70 (for the maximum benefit).
    
2. If you decide to collect your benefits prior to your full retirement age, the annual earnings limitation (before a benefit reduction occurs) is now $22,320 for 2024. This means that prior to your full retirement age, if you are collecting social security benefits and receive wage income more than $22,320, your social security benefits will be reduced $1 for every $2 you earn above the $22,320 threshold until you reach your full retirement age. As a quick note, the income threshold for the year in which you reach your full retirement age is increased to $56,520 and after your full retirement age the income limitation goes away completely (i.e. once you reach your full retirement age, you can collect benefits and earn as much as you want with no reduction in benefits).
    
3. The future of Social Security also has been in the news recently. If you take one item away from this article it should be that Social Security will not go broke. While it is projected that the Social Security trust fund (the existing reserves built up over many years from more people paying in than collecting) is expected to be exhausted by 2034, there would still be FICA taxes coming in to cover ~75% of all current benefits. To say this in another way, if the trust fund is depleted, there would only be a 25% reduction in benefits – not a bankrupt system. Furthermore, we envision reform to the system coming to help combat the increase in retirees filing for benefits as the baby boomers retire. These changes could come in many forms including increasing full retirement ages, changing how COLA increases are provided, further decreasing benefits for those who file before their full retirement age, allowing retirees to delay benefits past 70, and much more – a few of these changes are currently being discussed by Congress today.

Deciding when to file your own social security benefits is a complex process with many factors that should be considered before ultimately filing your papers. It’s important to understand that your benefit and strategy might look different than your neighbor, your brother or sister, or your best friend – and we strongly believe that you need to look at your entire financial picture to see how social security fits best from a timing perspective.

This fall, we will once again be hosting 4 Savvy Social Security educational events in partnership with AAA Minneapolis to help AAA members understand their options when it comes to different filing strategies, divorcee and spousal benefits, taxation, and some unique “outside-the-box” financial planning techniques that you can act on TODAY.

• September 12th, 9:30AM 
• September 12th, 4:00PM
• September 17th, 9:30AM 
• September 17th, 4:00PM 

Megan E. Gehrman, CFP®, and Luke J. Strom, CFP® are Financial Advisors at Sterling Retirement Resources, Inc., 120 Broadway Ave S. Suite 200, Wayzata, MN 55391. 763-762-3400. Securities and advisory services offered through Cetera Advisor Networks LLC, Member FINRA/SIPC, a Broker-Dealer & Registered Investment Advisor. Some advisory services also offered through AdvisorNet Wealth Partners. Cetera is under separate ownership from any other named entity.