People who get Social Security now must know about the changes that will happen in 2025. After all, the program changes every year, but only in small ways. People who are used to these changes aren’t surprised by them as often. For those who are new to the Social Security Administration this year, things may be a little less familiar when it comes to how the programs it runs work and the changes they have to make every year to stay current.
These are some of the changes that will happen in 2025:
How much it costs to live Changes to Medicare and Social Security funds
Benefits go through a cost of living adjustment (COLA) every year. This is done to make sure that people don’t lose the ability to buy things and keep up their standard of living. The CPI-W from the third quarter of the year was used to figure out this year’s COLA, which was revealed at 2.5%.
For seniors, this small increase can be good news because it means that inflation is finally going down. Contrary to what most people think, it is quite similar to other increases seen over the last ten years, averaging 2.6%, which is only 0.1% less than the average.
For those who don’t know what that means, the average monthly Social Security retirement income will go up by $48. For workers with disabilities, it will go up by $39 per month.
Sadly, benefits aren’t the only thing going up. If the 2% COLA seems small to some, it will be made even worse by the fact that Medicare payments are going up, especially Part B, which is going from $174.70 per month to $185. Since Medicare premiums are taken out of Social Security recipients’ pensions before they reach their accounts, most of them will get less of a raise.
There are some other changes, though, that come with a new year. It seems like every year the cost of Medicare goes up. This year it will go from $174.70 per month to $185. That extra fee will lessen the rise in Social Security payments in some ways.
The earnings test limit is increasing
These are good things for workers who keep making money while also getting retirement perks. There is something called the “Earnings Test Limit” that applies to these workers. If they make more than a certain amount of money, their benefits will go down. How much will depend on whether you leave work for good in 2025 or not.
People who won’t be fully retired until 2025 can only make up to $23,400 a year. For every $2 over that amount, their payments will be cut by $1. For people who will be full retirement age in 2025, the yearly exempt amount is $62,160. For every $3 over that amount, benefits will be cut by $1.
Higher maximum benefit
As a way to pay for all the different types of benefits, the Social Security Administration raises the highest benefit amount every year. The retirement bonus is the most well-known. It will rise from $4,873 per month in 2024 to $5,108 per month in 2025. To get this maximum benefit, you have to meet very strict requirements. For example, you must have worked for at least 35 years and regularly earn at least the maximum taxable amount, which for 2019 is $176,100. Also, people who get benefits have to wait until they are 70 years old to get the biggest sum.
The highest annual amounts are less for people who started getting benefits earlier. Up to $2,831 will be given to people aged 62 and up to $4,043 to people aged 67 and up. There are still big cash benefits to delaying benefits.
