News
What Every Retiree Needs to Know About Social Security in 2024
Social Security has been around for a long time. The program tends to undergo annual changes, which are important to stay informed about. With that in mind, here are three things you should know about Social Security in 2024.
1. The typical senior earns less than $2,000 per month
If your retirement plan involves using only Social Security, here is some important information. As of March 2024, the average monthly retirement benefit paid by Social Security is just $1,913.31. That’s just under $23,000 a year.
Image source: Getty Images.
If the idea of having to pay all your bills on such a small income seems impossible, consider this your wake-up call to start building retirement savings. It’s not easy to find money for a IRA or 401(k) plan, but if you have to retire on Social Security alone, you may end up needing to downsize your lifestyle to an extreme degree. This could lead to a retirement you really aren’t satisfied with.
2. Earnings over $168,600 are not taxed by Social Security
Social Security’s main source of revenue is the collection of payroll taxes. When you work, you pay into Social Security to help fund the program. But if you earn a lot of money, you may not pay Social Security taxes on all of your wages.
Every year, a salary cap is established to determine how much income is taxed for Social Security purposes. This year, that limit is $168,600. So if you earn a salary of $200,000, you are not paying Social Security taxes on an income of $31,400.
But don’t get too comfortable with that $168,600 salary cap. It will likely increase next year as it tends to increase from one year to the next. But also, some lawmakers are fighting to significantly raise the salary cap or even raise it completely to inject more much-needed money into the program.
3. Social Security may be a little further away from benefit cuts than initially expected
The amount of payroll tax revenue Social Security can collect could decline in the coming years as older workers retire en masse. Social Security can tap its trust funds to maintain scheduled benefits until these cash reserves are exhausted. When that happens, however, broad benefit cuts may be inevitable.
Recently, the Social Security Administrators released their annual report on the state of the program’s finances. He stated that based on recent numbers, it appears that Social Security trust funds will run out of money by 2035.
That’s not good news, but it’s worth noting that previous estimates have Social Security trust funds running dry by 2034. This update delays potential benefit cuts for another year, which is positive news in and of itself. .
The story continues
It’s important to prepare for possible cuts to Social Security if the timeline is brought forward or just in general. If you’re still working, save more – it’s really your best bet. If you’re already retired, it might not be too late to save if you’re willing to join the gig economy and work in some capacity.
Whether you’re retired or not, it’s important to know what’s going on with Social Security at all times. You never know when a major program change will have the potential to impact you – whether in the short term or in the future.
Which stocks should you add to your retirement portfolio?
The Motley Fool Stock Advisor analyst team just identified what they believe is the 10 best stocks for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years, potentially setting you up for a more prosperous retirement.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $578,143!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular analyst updates, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002*.
The motley fool has a disclosure policy.
What Every Retiree Needs to Know About Social Security in 2024 was originally published by The Motley Fool