There are good times and hard times in life that can change our lives. We all face changes on a daily basis, and these changes does not affect some people rather than others. Everyone’s life is changing, and so is Social Security. It is the duty of the government agency to mail millions of dollars in retirement, survivor, disability, and SSI payments to eligible people.
Change, however, does not necessarily mean something bad. As a matter of fact, it might actually turn out good for Social Security in the coming year. If you are currently eligible for retirement benefits, read more about the changes coming in 2025 and how they will hit your paycheck.
Raise
COLAs to Social Security payments are usually made once a year to help retirees’ paychecks retain their buying power as costs rise. There is, however, no guarantee that there will ever be a COLA in any year. There has to have been inflation from one year to the next for it to occur.
The COLA for every January is based on inflation data from the preceding third quarter; hence, that hike’s exact amount is unknown.
For most of 2022, inflation ran uncontrollably. That in and of itself was a good thing. Now, as far as 2024 is concerned, this pace of annual increase in living costs has been at par. In the event that it holds true, then Social Security benefits will most likely rise slightly in 2025.
Maximum Payment
The forecast for the Social Security COLA by the independent group Senior Citizens League stands at 2.57% in 2025. Although that’s smaller than the 3.2% raise recipients got in 2024, that’s still an increase.
Not all workers pay Social Security taxes on their entire salary. That is to say, better income earners pay into the program for every dollar they make only up to a wage tax ceiling that changes every year. Another side of that coin is that Social Security will only pay up to a certain amount each month.
In 2024, one will get no more than $3,822 monthly at full retirement age; if one delays benefits, it will be as much as $4,873.
Communicating again that only beneficiaries who reach the full retirement age, work experience, and Social Security contribution requirements would be able to get the maximum monthly benefit might not be very smart right now. Workers must also give up to their highest taxable earnings to get $4,873 when they retire.
Besides these huge monthly payments, seniors who claim before they reach the full retirement age will also get $2,710. About $1,900 will also have to be paid.
Earnings Test Limit
People generally think that you can’t work and get Social Security at the same time, but you can. It’s possible. It’s possible to lose some of your benefits if you work while getting benefits and are not yet fully retired. This is called the earnings-test limit, and it happens if your income goes over it.
Even if you haven’t reached full retirement age yet, but hope to by the end of the year, the most you can earn this year is $22,320, which is $59,520.
These limits are likely to go up next year. That way, you should be able to make a little more money without having to worry about taking less Social Security. To be clear, though, you do not lose the part of your benefits that were taken away because you made too much money.
The money will be put back into your monthly checks when you reach retirement age. Additionally, keep in mind that change can be either good or bad, based on the situation.
What is COLA?
COLA means Cost of Living Adjustments, increases Social Security benefits annually based on inflation.
How will these changes affect my Social Security benefits?
These changes would have several effects on your benefits, such as the amount you get each month or at what age you can start getting full benefits, or how your benefits are taxed.
How do these Social Security works?
It provides Financial support to retirees, disabled persons, and survivors of deceased workers on the basis of earnings and contributions made during their working lifetime.