If you are already retired or are ready to retire, it is important to have a plan for your income retirement. A large part of the people, the Social Security, will have an important role in this plan, so staying up to date with the latest information about benefits is essential.
The Social Security Administration (SSA) recently announced several key changes to the program for 2025, including the annual cost-of-living adjustment (COLA). Here we detail some key changes in the Social Security that will be implemented next year and what you should know.
5 Changes to Social Security in 2024 That You Should Know
- 1. The cost of living adjustment (COLA) increases
The SSA made an announcement about pay increases of 2.5% in 2025. The 2.5% adjustment will be equivalent to an increase of approximately $50 in monthly benefits for retired workers of the Social Security starting in January. Specifically, the average salary of retired will have an increase from $1,927 to $1,976. For a couple where both members receive benefits, the estimated payment will increase from $3,014 to $3,089. The SSA has linked the settings of the COLA to the consumer price index for urban wage earners and administrative employees (CPI-W) since 1975. In order to determine how much the COLA, the SSA compares the CPI-W for the third quarter of the previous year with the CPI-W for the third quarter of the current year. Then, the COLA It is adjusted based on the percentage change in the CPI-W from one year to the next.
- 2. Maximum taxable profits increase
In 2024, the maximum taxable earnings of the Social Security They were $168,600. This means that workers who contribute to the system pay taxes on wages up to that amount, generally at a rate of 6.2%. By next year 2025, maximum earnings will increase to $176,100, meaning a large portion of a worker’s income will be subject to the tax. This adjustment is due to an increase in the country’s average salaries.
- 3. The maximum benefit of Social Security will also increase
The maximum benefit of Social Security for a person who retire at the age of retirement complete will increase, this will go from $3,822 in 2024 to $4,018 in 2025. This maximum applies to those people who they retire at the age of retirement complete, which is 67 years for anyone born after 1960. The maximum benefit will be lower for those who they retire before reaching the age of retirement complete, because in those cases the benefits are affected. Also, those people who retire after the age of retirement complete can enlarge your benefit maximum, delaying the moment to request your retirement.
- 4. The benefit average for spouses and disabled workers also increases
The benefit average will be higher across the board next year, and that includes benefits for people such as widows, widowers and the disabled. These are the detailed figures: — The SSA points out that the average widowed mother with two children will see an increase from $3,669 to $3,761. — Older widows and widowers who live alone will have increases in their benefits from $1,788 to $1,832. — The benefit for a disabled worker with a spouse and one or more children, it will go from $2,757 to $2,826. It is important to clarify that, These are averages and individual situations may differ.
- 5. Social Security adjusts amounts exempt from the income test
If you have benefits retirement of Social Security will happen before reaching the age of retirement complete, the program can minimize your benefits if your income exceeds certain limits. This is known as the income test. Retirement and can demand a significant part of your benefits if you are still working.
