Here’s the 1 2024 Social Security change that will have the worst consequences:

The only constant in life is change. The Greek philosopher Heraclitus noticed this nearly 2,500 years ago. And that’s still true today. This even applies to Social Security programs.

The popular federal program will see several major adjustments over the next year. Change can be good, but not always. Here are the 2024 Social Security changes that will put you in the worst-case scenario:

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Most of the upcoming changes to Social Security are positive

Before we get to the painful part, it’s important to note that most of the upcoming Social Security changes are positive. For example, all beneficiaries will receive a cost-of-living adjustment (COLA) of 3.2% per year. This is significantly lower than the 8.7% increase received in 2023, but still above the average over the past decade.

Maximum retired worker benefits will also be increased. The most a person claiming full retirement age (FRA) in 2023 could earn was $3,627 per month. Next year, the maximum will increase to $3,822 per month.

There’s also good news for individuals who start receiving Social Security retirement benefits before reaching FRA and continue to work. The Social Security Administration (SSA) cuts your benefits by $1 for every $2 you earn over the annual limit. During years in which an individual reaches FRA, benefits are reduced by $1 for every $3 of income over the higher annual limit. This year, the lower annual income limit was $21,240 and the upper income limit was $56,520. In 2024, these limits will increase to $22,320 and $59,520, respectively.

Income limits will also change for disabled people who receive Social Security benefits and continue to work. Non-visually impaired workers can earn $1,550 per month in 2024, up from $1,470 per month in 2023, without a benefit interruption. For visually impaired workers, the income threshold will increase from $2,460 per month to $2,590 per month in 2024. One month in 2023.

It harms the worst, but doesn’t affect many people.

However, there is one notable Social Security change that could lead to worst-case scenarios. But the silver lining is that this won’t affect many Americans.

This year, the Social Security portion of the Federal Insurance Contribution Act (FICA) payroll tax applies only to the first $160,200 of earnings. Setting this tax rate at 6.2% means that Uncle Sam could take away approximately $9,932 of an individual’s wages. Employers pay a corresponding tax, which means that a self-employed worker earning more than $160,200 in 2023 will pay about $19,865 in Social Security taxes.

In 2024, the payroll tax limit will increase by 5.2% to $168,600. Some individuals may see the federal government keep an additional $521 or so. Self-employed individuals who earn at least the threshold will lose an additional $1,042 (rounded to the nearest dollar).

The reality, of course, is that most Americans don’t earn anywhere near $168,600 (or this year’s cap of $160,200). The average household income in the United States in 2022 was $74,580. These numbers reflect the most recent data available from the U.S. Census Bureau. Median household income could be higher in 2023 and 2024, but that is not the case. that much higher.