It’s crucial to have a schedule for your retirement income if you’re retired or have plans to retire quickly. Social Security will likely have a major impact on the majority of people, so it is important to stay informed about the most recent gains data.
The Social Security Administration ( SSA ) recently announced several key changes to the program for 2025, including its annual , cost of living adjustment , ( COLA ). What are some significant Social Security changes that will occur following month, and what you need to know.
Watch out for these five Social Security revisions in 2024.
More than 72.5 million persons depend on one of , Social Security’s gain programs, so yearly changes to the system and its payouts are usually very anticipated.
This year’s cost-of-living adjustment ( COLA ) is lower than last year’s 3.2 % increase. Any extra money is still a delightful boost for those who have a fixed income. ( If you need help developing a plan for your retirement income, you may want to consider hiring , a financial advisor. )
1. Cost of living adjustment ( COLA ) rises
The SSA has announced that benefit checks  , will rise 2.5 % in 2025. Beginning in January, the 2.5 % adjustment will result in an average increase of$ 50 in Social Security benefits for retired workers.
Specifically, the average check for retired workers will increase from$ 1, 927 to$ 1, 976. For a couple with both partners receiving benefits, the estimated payment will increase from$ 3, 014 to$ 3, 089.
Since 1975, the SSA has associated COLA adjustments with the Consumer Price Index ( CPI-W) for urban wage earners and clerical workers. To determine the COLA, the SSA compares the third-quarter CPI-W of the past year to the third-quarter CPI-W of the current time. The COLA is finally adjusted based on the CPI-W percent change from one year to the future.
2. Peak deductible income increasing
In 2024, the highest earnings subject to Social Security taxes was$ 168, 600. This results in workers paying a salary above the 6.2 % rate, which means they are subject to this tax. In 2025, the greatest profits will increase to$ 176, 100, meaning more of a farmer’s earnings will become subject to the tax. This modification is a result of a rise in average pay in the United States.
3. Social Security’s greatest benefit is expected to increase as well.
The , maximum Social Security benefit , for a worker retiring at full retirement age will increase from$ 3, 822 in 2024 to$ 4, 018 in 2025. This maximum is applicable to those who retire at 67, which is the entire retirement age for those who were born after 1960.
Because gains are reduced in such circumstances, the greatest benefit may be lower for those who retire before the full retirement age. On the other hand, those who retire after the full retirement years can improve their highest profit by putting off retirement.
4. Regular benefit for spouses and handicapped employees is increasing, to
In 2025, the average gain will increase, including those for people like women, widowers, and the handicapped. How’s how those numbers break out:
According to the SSA, the ordinary divorced mother with two kids will see a raise from$ 3, 669 to$ 3, 761.
Benefits for aged widows and widowers who live alone will increase from$ 1, 788 to$ 1, 832.
A disabled worker with a partner and one or more kids will receive a profit raise from$ 2,757 to$ 2,826.
Of course, those are statistics, and , personal circumstances may change.
5. Social Security changes earnings that are free from the income tax.
If you receive Social Security retirement benefits before reaching the age of your total pensions, the system may decrease your rewards if your earnings exceed certain thresholds. If you are still employed, you can take the benefit test known as the retirement earnings test. The exempt amounts for the retirement income test will be the following in 2025:
If you , start collecting Social Security before full retirement age, you can earn up to$ 1, 950 per month ($ 23, 400 per year ) in 2025 before the SSA will start withholding benefits, at the rate of$ 1 in benefits for every$ 2 above the limit. In 2024, the maximum exempt earnings were$ 1, 860 per month ($ 22, 320 per year ).
This rule still applies until the year you reach full retirement age, but only until the month you reach full retirement age, and with much more lenient terms. In 2025, you can earn up to$ 5, 180 per month ($ 62, 160 per year ) before benefits are withheld, at the rate of$ 1 in benefits for every$ 3 earned above the limit ( instead of every$ 2 ). In 2024, the threshold was$ 4, 960 per month ($ 59, 520 per year ).
Bottom line
Retirees and other beneficiaries are benefit-boosting through the Social Security COLA for 2025. However, this is n’t the only change to the program. Additionally, cost increases are being reflected in other levels and thresholds.
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