Key Actions Retirees Must Take to Maximize Social Security Benefits

According to Lagradaonline , As the new year approaches, Social Security recipients should be aware of important changes the Social Security Administration (SSA) is implementing in 2025. Understanding how these adjustments will impact your benefits can help you avoid issues down the road and ensure you’re maximizing your Social Security payments.

Calculate Your New Social Security Check Amount After the COLA Increase

Each year, Social Security benefits are adjusted for inflation through a cost-of-living adjustment (COLA). In 2025, the COLA will increase benefits by 2.5%. To calculate your new benefit amount, simply take your current monthly payment, apply the 2.5% increase, and add the result to your existing benefit. For example, the average retirement benefit will increase by $47 per month in 2025.

Familiarize Yourself with the 2025 Benefits Calendar

The SSA’s distribution schedule for benefits will largely remain the same in 2025. Supplemental Security Income (SSI) recipients will continue to receive payments on the first of each month, though the first payment of 2025 will be issued on December 31, 2024, due to the New Year’s holiday. For retirement and other benefits, payments are made on a staggered schedule:

• Birthdays from the 1st to 10th of the month: Benefits will be issued on the second Wednesday of the month.
• Birthdays from the 11th to 20th of the month: Payments will be sent on the third Wednesday.
• Birthdays from the 21st to 31st of the month: Payments are delivered on the fourth Wednesday.

Remember, the holiday rule still applies, so the payment date may change if a national holiday falls on the scheduled delivery day.

Double-Check Your Full Retirement Age

If you’re planning to retire in 2025, make sure you’re clear about your full retirement age. For most people, the full retirement age is between 66 and 67 years old. If you were born before 1959, you’re likely good to go. However, if you were born in 1959, your full retirement age is 66 years and 10 months. If you were born in 1960 or later, your full retirement age is 67, so you’ll need to wait until you’re 67 to receive full benefits.

Calculate Your Income Tax Obligation

Before the end of 2024, it’s important to evaluate whether you’ll owe federal income taxes on your Social Security benefits. Around 40% of Social Security recipients face taxes on their benefits, mainly due to additional income from sources like wages, investments, or interest. Your tax liability is determined by your “provisional income,” which is calculated by adding your Adjusted Gross Income (AGI), nontaxable interest, and half of your Social Security benefits.

Also Read – 2025 SSDI Payment Dates and COLA Increase Explained

Here’s how taxability works based on your provisional income:

• Single Filers:
  • Provisional income less than $25,000: No taxes on benefits.
  • $25,000–$34,000: Up to 50% of benefits taxable.
  • Over $34,000: Up to 85% of benefits taxable.
• Married Couples Filing Jointly:
  • Provisional income less than $32,000: No taxes on benefits.
  • $32,000–$44,000: Up to 50% of benefits taxable.
  • Over $44,000: Up to 85% of benefits taxable.

Review the Earnings Test Rules

If you’re still working while receiving Social Security benefits and haven’t reached full retirement age, your benefits may be reduced under the earnings test. For 2025, the SSA will deduct $1 for every $2 you earn above the annual limit, which will be $23,400. If you reach full retirement age in 2025, the earnings test will become less restrictive, with the SSA deducting $1 for every $3 earned above a higher limit, which will be $62,160. This higher limit applies only to earnings before the month you reach full retirement age.

By keeping these key changes in mind, you can make informed decisions about your Social Security benefits and avoid surprises in the new year.