Two big changes have been announced by the Social Security Administration for 2025 that will affect pensioners now and in the future.
The SSA makes changes or improvements to its insurance and financial programs every year so that more people can use these government benefits.
Two changes that were made recently have to do with how much money you will have next year. Here, you can find out more about the new changes and how they will affect retired, survivors, disabled people, and people who get SSI.
Existing Social Security beneficiaries will get a new cost of living adjustment increase
The first big news affects people who are already retired or getting Social Security payments. A notice from October 10 said that in 2025, everyone getting Social Security benefits would get a 2.5% cost-of-living Adjustment (COLA).
The announcement says that this is a little less than the 2.6% average COLA that Social Security recipients have made over the last ten years. A COLA does not happen every year, but it does happen most of the time.
The method used to make them looks at how a consumer price index changed in the third quarter of the year. They are already covered by Social Security. If the price index shows inflation, retirees get an extra benefit that keeps their spending power.
In 2025, people who get Social Security will get a 2.5% COLA. This will mean that, for the average retiree, their monthly payments will go up by about $50. In January, you will start getting checks with the extra money in them.
Current employees may have a larger Social Security tax debt
The other important announcements will have an effect on current workers, especially those who make more money. It has to do with how much Medicare and Social Security tax you pay on your income.
In 2024, the taxable cap, or the most money that will be taxed by Social Security, is $168,600. But this amount will go up next year. It will go up to $176,100. The taxable ceiling goes up because of inflation and wage rise as well.
As prices go up, people have to pay more taxes on a bigger chunk of their income.
People who have to pay more in 2025 will get more benefits later on because benefits are based on how much you paid into the system and you can only get credit for income up to the taxable limit.
People who make $168,600 or more a year will not be affected by this change, of course. People whose incomes are higher than that amount will only have to make extra payments.
At the moment, the Social Security tax rate is 6.2% for employers and 6.2% for employees. This means that if these workers and their bosses make at least $176,100 a year, they may owe an extra $465 each year.
Any money made over this amount will not be taxed. Changes like these will also happen in January 2025. Also, people who make a lot of money will get a little less money next year, while seniors will get a little more.
This means that both current retirees and people who want to work should be aware of the new rules that the Social Security Administration has put out. Plan for these changes now so that you are ready for 2025.
How will the new COLA increase the impact of Social Security checks in 2025?
The Social Security Administration finally announced the new COLA increase for next year, which was set at 2.5% on October 10th. This comes after months of waiting.
Even though it is less than the 3.4% COLA for 2024, Social Security recipients will still get more money every month. Please read the following to find out more about all the new payment amounts:
| Retirement benefits (Plus 2.5%) | Survivor benefits (Plus 2.5%) | SSDI benefits (Plus 2.5%) | SSI benefits (Plus 2.5%) |
| On average: $1,948
Age 62: $2,778 Age 67: $3,918 Age 70: $4,995 |
On average: $1,543
Individual: $1,817 2 Children: $3,744 |
On average: $1,575
Blind recipients: $2,655 Maximum payment: $3,918 |
On average: $715
Individuals: $967 Couples: $1,450 Essential person: $484 |
Also see:-Social Security Update No Payments Scheduled for the Week of November 5—Here’s the Reason Behind It
