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Wednesday, July 24, 2024

3 Significant Social Security Changes in 2025 That Could Surprise Many Americans

The article discusses three significant changes to Social Security that may affect many Americans in 2025:

  1. Cost-of-Living Adjustment (COLA):
    • The COLA for 2025 is expected to increase benefits modestly, with a forecasted 2.7% increase, which would translate to an average monthly benefit increase of $51 for retired workers, bringing the total to $1,967.
    • This increase is based on the Consumer Price Index (CPI) for the third quarter of the previous year, which determines the annual COLA.
  2. Increased Social Security Taxes for High Earners:
    • The maximum taxable earnings limit for Social Security taxes is expected to rise from $168,600 in 2024 to $174,900 in 2025, resulting in higher taxes for high earners.
    • This change will not affect the 94% of workers earning less than the maximum taxable earnings cap, but high earners will need to pay more.
  3. Changes in Retirement Earnings Test Exempt Amounts:
    • The retirement earnings test exempt amounts will be adjusted based on changes in the national average wage index, allowing beneficiaries under full retirement age to earn more income before benefits are withheld.
    • The lower limit is expected to rise from $22,320 in 2024 to $23,280 in 2025, and the upper limit from $59,520 to $61,800.

These changes are crucial for beneficiaries and future beneficiaries to understand, as they can significantly impact their financial planning and retirement income.

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