People who get Social Security now need to know about the changes that will happen in 2025. The program does change every year, but only slightly. People who are used to these changes do not get as shocked by them.
People who are new to the Social Security Administration this year might not know as much about how the programs it runs work or the changes they have to make every year to stay up to date.
These are some of the changes that will happen in 2025:
How much it costs to live Changes to Medicare and Social Security funds Benefits go through a cost of living adjustment (COLA) every year. This is done to make sure that people don’t lose the ability to buy things and keep up their standard of living. The CPI-W from the third quarter of the year was used to figure out this year’s COLA, which was revealed at 2.5%.
For seniors, this small increase can be good news because it means that inflation is finally going down. Contrary to what most people think, it is quite similar to other increases seen over the last ten years, averaging 2.6%, which is only 0.1% less than the average.
For those who don’t know what that means, the average monthly Social Security retirement income will go up by $48. For workers with disabilities, it will go up by $39 per month.
Sadly, benefits aren’t the only thing going up. If the 2% COLA seems small to some, it will be made even worse by the fact that Medicare payments are going up, especially Part B, which is going from $174.70 per month to $185. Since Medicare premiums are taken out of Social Security recipients’ pensions before they reach their accounts, most of them will get less of a raise.
But a new year also brings some other changes. Medicare costs seem to go up every year. It will rise from $174.70 a month to $185 this year. In some ways, that extra fee will lessen the rise in Social Security payments.
The earnings test limit is increasing
These are good things for workers who keep making money while also getting retirement perks. There is something called the “Earnings Test Limit” that applies to these workers.
If they make more than a certain amount of money, their benefits will go down. How much will depend on whether you leave work for good in 2025 or not.
People who won’t be fully retired until 2025 can only make up to $23,400 a year. For every $2 over that amount, their payments will be cut by $1. For people who will be full retirement age in 2025, the yearly exempt amount is $62,160. For every $3 over that amount, benefits will be cut by $1.
Higher maximum benefit
Every year, the Social Security Administration raises the high benefit amount. This is how they pay for all the different types of benefits. The most well-known is the retirement bonus.
It will go up from $4,873 a month in 2024 to $5,108 a month in 2025. You have to follow a lot of strict rules to get this maximum benefit. In this case, you must have worked for at least 35 years and regularly make at least the highest amount of money that is taxed, which in 2019 is $176,100. Also, people who get benefits have to wait until they are 70 to get the most money.
People who began getting benefits earlier get less of the highest annual amounts. People aged 62 to 67 will get up to $4,043 and people aged 62 to 62 will get up to $2,831. Putting off benefits will still earn you a lot of money.
