Social Security changes announced for 2025
The Social Security Administration (SSA) has announced several changes that will become effective in 2025. These changes will affect both current recipients of benefits and those who are still working. One of the most notable changes is the Cost-of-Living Adjustment (COLA).
Starting in January 2025, Social Security benefits will receive a 2.5% boost, or around a $50 extra payment per month. Yet, a recent survey discovered that 54% of retirees say this increase won't be enough to keep pace with growing costs of everyday necessities. For people receiving Social Security benefits while simultaneously working, the amount of money they can earn before facing reduced benefits will also increase.
People who file for retirement benefits early can earn up to $23,400 in 2025 before their benefits are reduced, while those eligible for full retirement benefits in 2025 can earn up to $62,160. Individuals who have not yet retired and are high earners will have a larger portion of their paycheck subject to Social Security taxes. The maximum amount of earnings that are taxable through Social Security will be $176,100 in 2025, up from $168,600 in 2024.
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In addition to these changes, the maximum monthly benefit at the Full Retirement Age is increasing to $4,018, and the amount of income that must be withheld from early filers is rising. The income limits for people collecting disability benefits are also going up.
It will also become increasingly challenging to qualify for Social Security benefits in 2025. In order to receive a Social Security retirement benefit, a cumulative total of 40 work credits must be earned over a person's lifetime, with a maximum of four credits available per year. Starting next year, you will need to earn $1,810 per year to qualify for one lifetime work credit.
This week, thousands of people receiving Supplemental Security Income (SSI) will get even bigger benefit checks. The largest amount of money that SSI recipients can get each month is $967 for one person and $1,450 for two people in 2025. Mary Johnson, a Social Security and Medicare expert, said, “The increase in SSI benefits for 2025 will be significant, but unfortunately, prices are still very high for basic things like housing, meat, car insurance, and any type of service or repair.”
However, a 2.5 percent COLA would be considered fairly typical.
The next round of benefits for people receiving retirement payments is scheduled to take place on January 3. The estimated average monthly retirement benefit for Social Security recipients is projected to rise to $1,976 in 2025 from $1,907 in January 2024.
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