Retirement Matters

November 2023

Current Issues With Social Security and Medicare — Most Defined Benefit state employee retirees depend on financial support from their pension, Social Security, Medicare, and job earnings. But there is a continuous call for reducing Social Security and Medicare benefits, rather than raising revenue. Proposals include raising the Medicare eligibility age from 65 to 67, increasing the full retirement age for Social Security to age 70, and not allowing people below age 65 to claim Social Security early. With all the controversy promoting benefit cuts in the media, it may be confusing to know what’s in your own self-interest. However, it’s important for you to actively support those public officials that speak out on behalf of retirees and their families.

Divide and Conquer — According to a New York Times Op-ed, those that want to weaken Social Security and Medicare are attempting to divide the generations. The story being told is that the younger generations are paying to support current programs for the undeserving older generations now collecting benefits. It’s not that these naysayers suddenly started caring about younger people. They don’t believe in social insurance programs and haven’t supported Social Security and Medicare from the beginning. Now, they are trying to convince younger people that these safety net programs are unfair to them.

What’s unsaid, is that younger adults are already covered by Social Security, and also have a lot to lose. For example, a 27-year-old with a spouse and two children has some $2 million worth of life and disability insurance from Social Security. And, the average Millennial, born between 1981 and 1996, is on track to receive about $1 million in lifetime benefits. In fact, millennials will depend on these benefits, even more than today’s retirees do, because they are less likely to receive employer provided pensions than in the past. For those wondering if the program will exist when they retire, Stephen Goss, the Social Security’s chief actuary says that Social Security funding is a long way from not having any money to pay for benefits. Young people and older people need to unite to advocate for the program as there is strength in numbers.

Misleading Averages — According to the American Prospect Research Association, the issue is a difference in income class more than the generational divide. The basic delusion in these arguments is the misuse of averages. The average senior is richer, but this average includes Warren Buffett as well as the grocery bagger. The average older homeowners have benefited from an appreciation in housing values, but some older lower income renters have to spend more on housing. The average older American is living and working longer. However, more affluent Americans usually live longer than poor ones. Wealthier Americans tend to work past retirement age because they love their work compared to poorer Americans that may take an undesirable job because they need the money. In addition, workers of color are disproportionately at risk. About 50 percent of black Americans would be living in poverty without Social Security.

Current policies already disadvantage early retirees. Even so, not everyone can work longer due to their health or the strenuous nature of their work. The eligibility age remains at 65 for Medicare, even though nearly 1 in 3 Americans claim Social Security early at age 62. So, some that have already retired are waiting to receive life-saving medical care from Medicare if they can’t afford private health insurance during this “gap” period.

The full retirement age for Social Security was previously raised from 65 to 67, although workers can claim benefits early with a considerable penalty from age 62 - 66. While white collar professionals can probably work through their 60s, many less fortunate workers with physically-demanding jobs will struggle. It may be difficult to switch jobs in your 60s, and maintain enough income, without the right work experience. In addition, workers in their 60s face layoffs and rejection from job discrimination, making it harder to stay employed. Innovative policy solutions are needed as the retirement age has already been increased to 67. For more insight on why lowering benefits isn’t justified, search the National Academy of Social Insurance (NASI) for policy recommendations on Older Workers Retirement Security.

Social Security Cost of Living (COLA) Increase — In 2024, a 3.2 percent COLA will be provided to 66 million Social Security beneficiaries and 7.5 million receiving Supplemental Security Income (SSI) which is federal money for disabled children and adults with low income and few resources. Social Security will increase by more than $50 per month starting in January. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Next year’s annual increase pales by comparison to the 8.7 percent increase for 2023, a rate increase not seen since 1981. The good news is that Inflation is expected to continue to decline in 2024. See the chart below.

Social Security COLA increase 2024
Category Average monthly increase Average 2024 check amount
Retiree $58 $1,885
Worker with disabiities $47 $1,530
Senior couple, both receiving benefits $95 $3,067
Widow(er) $55 $1,759
Widow(er) with two children $113 $3,633

Payroll Tax Cap - In 2024, the maximum amount of earnings subject to the Social Security payroll tax will increase to $168,600 from $160,200. Raising this cap further, and ultimately eliminating it, would strengthen the program’s solvency and fund benefit improvements

Other selected 2024 changes listed below benefit those with earnings.

  • The contribution limit for individual retirement accounts (IRAs) increased to $7,000 for 2024, up from $6,500.
  • The contribution limit for employees in 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan rose to $23,000, up from $22,500.
  • The Social Security earnings limit adjustments include:
    • For workers younger than their full retirement age, the earnings limit will increase to $22,320. ($1 from benefits is deducted for each $2 earned over the limit.)
    • For workers reaching their full retirement age in 2024, the earnings limit will increase to $59,520. ($1 is deducted for each $3 earned over $59,520 until the month that they turn the full retirement age.)
    • There is no earnings limit for those at their full retirement age or older for the entire year.

Editor’s note: Joanne Bump serves as feature columnist for “Retirement Matters.” Column content is time sensitive and is based on information as of 5/7/23. Joanne can be contacted by e-mail at

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