Social Security Changes in 2025: What You Need to Know
If you are one of the roughly 80 million Americans who currently receive Social Security, there are several changes that take effect on January 1st of the new year that you need to be aware of.
Good News for Retirees: Yes, Your Payments Are Going Up
Amidst the challenging economic landscape, there is a silver lining for retirees as the Cost-of-Living Adjustment (COLA) for 2025 is set at 2.5%. While this increase may seem modest, every additional dollar in your monthly payment can make a difference, especially with the current inflation rates affecting our purchasing power.
Bad News for Workers: Yes, Your Payments Could Go Up
Workers will see a change in the payroll tax as the income limit subject to the 12.4% tax is raised from $168,000 to $176,000. While this adjustment predominantly impacts the top 6% of earners, it is essential to be mindful of the implications for self-employed individuals and entrepreneurs.
More Good News: Maximum Monthly Benefits Are Going Up
For those planning to delay retirement, the maximum monthly benefit has been increased to $4,018, providing an incentive for individuals to work longer and maximize their Social Security earnings.
Early Filer Benefit and Disability Income Thresholds Increasing
Changes in benefit withholding thresholds for early filers and income thresholds for disabilities aim to provide individuals with more flexibility in earning additional income without affecting their Social Security payments. These adjustments offer relief to those navigating retirement and disability benefits.
Benefit Work Credits Update
The cost of earning credits towards Social Security benefits has been raised, requiring individuals to earn at least $1,810 in 2025 to receive the maximum number of credits. This adjustment emphasizes the importance of consistent income accumulation for future retirement benefits.
Social Security Fast Facts
- Majority of Social Security recipients fall within the 18-64 age group.
- 55% of Social Security beneficiaries are women.
- The number of Americans receiving Social Security has significantly increased over the years.
- In 2023, Social Security payouts amounted to $1.35 trillion.
- Social Security spending constitutes approximately 22% of the federal budget.
