In some areas of life, change is not always a good thing, but in others, like social securityit can bring positive results. For example, you may not adapt quickly if your company decides to eliminate remote work and force everyone to work in the office full-time. Likewise, you may be hesitant to change your diet if your doctor tells you to cut down on salt and fried foods. But not every change is negative, and the new changes soon to be implemented by the Social Security Administration will bring some good news for retirees in the country. If you’re eligible for the Old Age, Survivors, and Disability Insurance (RSDI) or Social Security Supplemental Income (SSI) programs, learn more about how the next changes will affect Social Security and its payments in 2025.
Social Security has announced the new changes that will affect benefit recipients next year
Social benefits should be increased by 2.5 to 3 percent
The annual Cost of Living Adjustment (COLA) Social Security benefits are designed to help maintain the purchasing power of those checks as the cost of living increases. However, there is no guarantee that a COLA will occur in any given year. Annual inflation is required for that to happen. Fortunately, the era of exceptionally high inflation that dominated most of 2022 is behind us. Even so, annual cost-of-living increases have been stable since 2024.
This means that Social security benefits will likely increase in some way the following year. However, the amount of that increase is still unknown, since each January’s COLA is determined using the previous third quarter’s inflation figures. According to a recent forecast by the nonpartisan Senior Citizens League, Social Security’s COLA is expected to reach 2.57% in 2025. That’s still an increase, even if it’s less than the 3.2% increase that beneficiaries received in early 2024.
The maximum monthly payment is set to increase in 2025
Not every employee pays Social security contributions on their entire paycheck. The payroll tax has a cap that changes annually; higher earners only pay into the program for every dollar they earn below the cap. However, there is a maximum monthly payment that Social Security makes, which is the other side of the coin. The maximum monthly payment in 2024 for an individual claiming full retirement age is $3,822. However, by 2025, that number will most likely increase. Undoubtedly, the maximum monthly Social Security payment is only available to those with higher incomes. However, you get a significant benefit if you are in this situation and plan to retire in 2025.
Further changes to the earnings limit
Contrary to popular belief, it is possible to work and receive benefits at the same time. Of course you can. But if your income exceeds a certain threshold, known as the earnings test limit, and you work while receiving benefits and have not yet reached your full retirement ageyou run the risk of having some of your Social Security withheld. This year’s income limit is $22,320, or $59,520 if you reach your full retirement age before the end of the calendar year but haven’t yet reached it.
Therefore, you should have some room to earn a little more money without having to worry about your Social security contributions held back as these limits are likely to be raised next year. But to be clear, you won’t lose the percentage of your benefits that is withheld because you exceeded the earnings limit. When you’re old enough to retire, that money will be put back into your monthly check. Depending on your circumstances, the change could be either beneficial or detrimental. But retirees have plenty of reasons to be optimistic about Social Security as they head into 2025.
