The Social Security Administration is set to implement significant changes in 2025 that will impact over 72 million beneficiaries across the United States. These changes are crucial for seniors who depend on Social Security payments to cover their expenses and maintain financial stability during retirement. Here’s a detailed look at the upcoming modifications and how they might affect you.
Cost of Living Adjustment (COLA)
One of the most anticipated changes is the Cost of Living Adjustment (COLA). To help seniors keep pace with rising costs, benefits are expected to increase between 2.6% and 3.2%, based on recent estimates. The official adjustment will be confirmed at the end of 2024.
Changes for Retired Workers
Increased Payroll Tax for High Earners Starting in 2025, high earners will face higher payroll taxes. The 12.4% Social Security payroll tax will apply to all earned income up to $168,600. Any earnings above this threshold will not be subject to this tax. This adjustment aligns with the National Average Wage Index (NAWI) and is expected to rise above $168,600 due to increasing costs of goods and services.
Higher Maximum Monthly Benefits With the increase in payroll taxes, high earners can also expect a rise in the maximum monthly benefit at full retirement age, which is projected to increase slightly from the current cap of $3,822.
Stricter Eligibility Requirements Eligibility for Social Security benefits requires earning 40 lifetime work credits, with a maximum of four credits per year. In 2024, earning $6,920 annually will grant these four credits, but this threshold is likely to increase slightly in 2025.
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Changes for Disabled Workers
Higher Income Thresholds As of April 2024, around 7.25 million workers receive long-term disability benefits. In 2025, disabled workers who are not blind will be able to earn up to $1,600 per month without losing their benefits, an increase from $1,550 in 2024. For blind-impaired workers, the threshold will rise to approximately $2,700 per month, up from $2,590.
Here’s how much Social Security benefit payments could increase in 2025 based on early estimates. https://t.co/IVOhJsR3BF
— VERIFY (@VerifyThis) May 16, 2024
Conclusion
These changes aim to help Social Security beneficiaries, especially seniors and disabled individuals, maintain their purchasing power and financial stability. Stay informed about these modifications to understand how they will impact your benefits in 2025.
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