Total change in Social Security as of this date – Write down everything you need to know, retiree

According to Lagradaonline, Social Security plays a crucial role in the financial well-being of many Americans, especially those aged 60 to 89, approximately 96.7% of whom rely on the program. As of August 2024, the average monthly benefit for retired workers was about $1,920, providing significant support for individuals in this age group. Notably, 50% of those aged 65 and older receive at least half of their income from Social Security, while around 25% depend on it for 90% or more of their total income.

Given the program’s significance, the recent announcement from the Social Security Administration (SSA) regarding the Cost-of-Living Adjustment (COLA) for the upcoming year is particularly relevant. While the adjustment is lower than what some beneficiaries may have hoped for, it is still a key development to consider. Here’s what retirees need to know about the changes to Social Security benefits starting in 2025.

2.5% Benefit Increase

In 2025, Social Security benefits, along with Supplemental Security Income (SSI) payments, will see an increase of 2.5%. This change will affect nearly 73 million Americans, resulting in an approximate monthly increase of $50. For instance, if your current Social Security benefit is $1,920 per month, starting in January, you will receive about $1,968. SSI payments will also reflect this increase beginning December 31, 2024.

It’s worth noting that the COLA increase for 2024 was 3.2%, and over the past decade, the average COLA adjustment has been around 2.6%.

Benefits of the Increase in Relation to Inflation

While a 2.5% increase might not seem substantial, the primary aim of the COLA is to ensure that benefits keep pace with inflation. As of September 2024, the annual inflation rate was recorded at 2.4%. The 2.5% adjustment will help maintain beneficiaries’ purchasing power amid rising living costs.

Increase in Maximum Taxable Earnings

Another significant change effective in January 2025 is the increase in the maximum taxable earnings for Social Security. This limit will rise from $168,600 to $176,100. While this adjustment primarily affects those nearing retirement, it’s essential for all employees to be aware of the changes.

Currently, the Social Security tax rate stands at 12.4%, shared equally between employees and employers (6.2% each). With the new maximum taxable earnings, employees will contribute up to $10,918.20 in 2025, compared to $10,453.20 in 2024. Employers will match this contribution.

Also read: Social Security Payment of up to $1,415 or up to $4,873 goes out on these dates in November

Self-employed individuals will continue to pay the full 12.4% on their earnings, amounting to $21,836.40 annually, applicable only to the first $176,100 of income.

Benefit Notices Coming in December

If you receive Social Security benefits, expect to receive a notice detailing your final benefit amount by early December 2024. This year, the COLA statement will feature a simplified design and will be readily accessible to all beneficiaries.

How to Stay Informed

To track your COLA notice more efficiently, consider using your My Social Security account. This method provides quicker access than waiting for a mailed notice, and you can also sign up for email or text alerts for updates.

As Medicare will also undergo changes in 2025, it’s advisable to check Medicare.gov for the latest information. Beneficiaries who have both Social Security and Medicare can monitor their accounts and benefit amounts through the message center, with updates beginning at the end of November.

Conclusion

The 2025 COLA adjustment will provide much-needed support for retirees and SSI beneficiaries as they navigate the evolving economic landscape. While changes are coming, staying informed will help ensure that you are prepared for the upcoming adjustments in Social Security benefits.