Important Social Security Updates: What You Need to Know
- Social Security features automatic adjustments to keep pace with inflation and rising average earnings, ensuring your benefits stay relevant.
- These changes affect everyone, regardless of whether you’re currently receiving benefits or not.
- Staying informed about the rules and upcoming changes can empower you to make smart financial decisions and maximize your benefits.
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Social Security Alert: 3 Key Changes in 2025 That Could Affect You
Despite the looming deadline for major Social Security reforms, a comprehensive overhaul is unlikely to happen in 2025. The Social Security Board of Trustees warns that the trust fund will be depleted by 2033, leaving only 79% of benefits covered by Social Security tax inflows.
However, several significant changes are on the horizon for 2025, and it’s essential to understand how they may impact you, whether you’re:
- Already retired and collecting benefits
- Still working and planning for retirement
- Years away from applying for Social Security benefits
These changes can have far-reaching consequences, and being informed can help you make the most of your benefits and plan for a secure financial future.
3 Significant Social Security Changes in 2025: What You Need to Know
As the new year approaches, it’s essential to stay informed about the changes that will impact your Social Security benefits. Here are three key updates to be aware of:
- Cost-of-Living Adjustment (COLA): The 2025 COLA is set at 2.5%, which means seniors will receive a bump in their Social Security benefits starting in January. This adjustment is based on the Consumer Price Index (CPI-W) and will affect anyone aged 62 or older, whether they’re collecting benefits or not.
- Increased Social Security Tax for High Earners: If you’re a high earner, be prepared for an increase in tax withholdings from your paycheck. The earnings limit for 2025 is $176,100, up from $168,600 in 2024. This means that anyone earning above the limit will see an additional $465 withheld from their total pay, approximately $17.88 per biweekly paycheck.
- Earning More from Work While Collecting Benefits: If you continue to work in your early 60s while collecting Social Security, you may unintentionally reduce your monthly benefits check due to the Social Security earnings test. However, the good news is that the earnings limit for 2025 has increased to $23,400 ($62,160 in the year you reach full retirement age). This means you can earn more from work before seeing a reduction in benefits.
Understanding the Social Security Earnings Test
The earnings test withholds $1 of benefits for every $2 in excess of the earnings threshold. However, if you find your benefits reduced by the earnings test, know that the money isn’t lost forever. The Social Security Administration will adjust your benefit upon reaching full retirement age to account for the foregone payments.
Maximizing Your Social Security Benefits
If you’re like most Americans, you may be behind on your retirement savings. However, there are little-known “Social Security secrets” that can help boost your retirement income. For example, one easy trick could pay you as much as $22,924 more each year. By learning how to maximize your Social Security benefits, you can retire confidently with peace of mind.