Retirees, Don’t Miss This! Major Social Security Updates You Need to Know About for 2025
Social Security beneficiaries are in for some important changes in April 2025 that could have a big impact on their finances. From cost-of-living adjustments to shifts in eligibility rules, retirees should be aware of these upcoming updates. Here’s what you need to know.
1. Cost-of-Living Increase (COLA)
In April 2025, Social Security beneficiaries can expect a boost to their monthly payments thanks to the annual Cost-of-Living Adjustment (COLA). While the exact percentage increase will depend on inflation rates, retirees can expect to see more money in their pockets, helping them cope with rising living costs such as healthcare, groceries, and housing.
For many retirees, Social Security is their main source of income, so any COLA increase is welcome news. However, the precise figure won’t be confirmed until later in 2024, but trends suggest it could be a moderate increase based on current inflation.
2. Full Retirement Age Set to Rise
For those planning to claim Social Security benefits in the near future, there’s another key change to watch out for: the Full Retirement Age (FRA) is going up. Right now, people born between 1943 and 1954 can claim full benefits at age 66. Starting in 2025, the FRA will increase by two months for each year. For example, those born in 1960 or later will reach full retirement age at 67.
This change means that retirees will have to wait longer to receive the full amount of their benefits. However, it’s still possible to start claiming benefits at 62, but at a reduced rate.
3. Higher Taxes for High Earners
In 2025, there will be an increase in the maximum amount of income that is subject to Social Security taxes. This means that high earners will see an increase in their payroll taxes, as their income above a certain threshold will now be taxed. This change aims to help fund the Social Security program, which is facing financial challenges as the U.S. population ages.
In 2024, the maximum taxable earnings limit is set at $160,200, but that amount is expected to rise in 2025. While this won’t affect most retirees, those with higher incomes will feel the impact of these higher taxes.
4. Earnings Test Thresholds Are Increasing
Retirees who choose to keep working while receiving Social Security benefits will also see a positive change in 2025. The earnings test limit, which reduces benefits for those earning above a certain threshold, will rise. This means that retirees can earn more money without having their Social Security benefits reduced.
If you plan to continue working while collecting Social Security, it’s important to keep track of these updated limits to make sure you don’t lose out on your benefits.
5. Better Benefits for Spouses and Survivors
The Social Security Administration is also making efforts to improve benefits for spouses and survivors. Starting in April 2025, there will be expanded coverage to help ensure that surviving spouses and family members are better supported financially. This change aims to provide additional financial security for those who depend on Social Security from a spouse or deceased partner.
6. New Features for Managing Benefits Online
In a bid to modernize and improve customer service, the Social Security Administration is rolling out new online features in 2025. These upgrades will make it easier for beneficiaries to track their benefits, request changes, and get updates directly from the Social Security portal. Retirees will find it more convenient to access their accounts and manage their benefits with these improvements.
What Should Retirees Do Now?
With these significant changes coming in 2025, it’s important for retirees to prepare. Take the time to review your Social Security strategy and make sure you understand how the upcoming COLA increase, higher taxes, and earnings test adjustments will impact your finances. If you’re nearing retirement age or still working while collecting benefits, it may be wise to consult a financial advisor to make the most of these updates.
These changes are part of an ongoing effort to ensure that Social Security remains sustainable for current and future beneficiaries. By staying informed and planning ahead, retirees can continue to rely on Social Security as a critical part of their financial security.
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