Fedweek

An earnings test is also set to rise. Image: J.J. Gouin/Shutterstock.com

Several key figures are increasing for 2024 in the Social Security program affecting both current employees and retirees.

For the former group, the 6.2 percent Social Security payroll tax will apply on up to of $168,600 earnings, up from $160,200. For FERS employees, that tax cuts off at that threshold and from there on they pay only the civil service retirement contribution (which is either 0.8, 3.1 or 4.4 percent, depending on when they were hired).

Employees under “pure” CSRS don’t pay the Social Security payroll tax but instead pay 7 percent into the federal retirement fund. Those in the hybrid CSRS Offset program pay 6.2 percent into Social Security and 0.8 percent into the federal retirement fund but the Social Security cutoff doesn’t apply to them; all the money after that point goes into the federal retirement fund.

For those drawing Social Security benefits, the earnings test applying to beneficiaries aged 62 through that program’s “full” retirement age (66 and eight months, for those starting to draw benefits in 2024), will rise to $22,320 from $21,240. Those beneficiaries lose $1 in Social Security benefits for every $2 in earnings through employment or self-employment above the limit.

A separate earnings test applies only to earnings for months in the year an individual reaches full retirement age but prior to the individual attaining that age. One dollar in benefits will be withheld for every $3 in earnings above, $59,520 up from $56,520. There is no limit on earnings beginning the month an individual attains full retirement age.

For purposes of determining the benefit offset under the windfall elimination provision—which can reduce Social Security benefits of CSRS retirees who worked long enough in each system to qualify for a benefit from each—the annual “substantial earnings” threshold will rise to $31,275 from $29,700. The maximum reduction to Social Security benefits due to that provision will be above $550 a month.

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Calculator: See Your Annuity Estimate!

FERS Retirement Guide 2023