If I already know joy or plan to retire soon, it is essential to have a plan for your income retirement. For most people, Social Security will play a crucial role in this plan, so staying up to date with the latest information about benefits is invaluable. The Administration of Social Security (SSA) recently announced some key changes to the program for the following year 2025, which includes the annual adjustment of the (COLA). Here we tell you some details of the key changes in the Social Security that will be implemented next year and what you should know.
Pay close attention to these changes in the Social Security for 2025, more than 72.5 million people depend on one of the benefits of the Social Security, so the changes every year in the program and its payments are always highly anticipated. This year’s (COLA) adjustment is lower than the 3.2 percent increase last year. Still, any extra income is a welcome boost for beneficiaries who have a fixed income. (If you think you need help developing a plan for your income retirement, you may want to consider hiring a financial advisor).
Some Important Changes to Take Into Consideration When Retiring
- Cost of Living Adjustment (COLA) Increases
The SSA has announced that the checks benefits will have a 2.5% increase in 2025. The 2.5 percent adjustment will be equivalent to an average increase of $50 in the benefits per month that the retired workers of the Social Security starting in January. Specifically, the average salary of retired workers will increase from $1,927 to $1,976. In the case of a couple in which both members have benefits, the estimated payment will increase from $3,014 to $3,089.
The SSA have linked the settings of the COLA to the consumer price index for urban wage earners and administrative employees (CPI-W) since 1975. To determine 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.
- Maximum taxable earnings 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, usually at a rate of 6.2%. In 2025, maximum earnings will increase to $176,100, meaning more of a worker’s income will be subject to the tax. This adjustment is due to an increase in the average salaries of citizens. The maximum benefit of Social Security will also increase.
- The average benefit for spouses and disabled workers is also increasing
The average benefit will have an increase in general next year 2025, and that includes benefits for people such as widows, widowers and the disabled. Below are the figures:
- The SSA says 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 see their benefits increase from $1,788 to $1,832.
- The benefit will increase for a disabled worker with a spouse and one or more children from $2,757 to $2,826.
- Social Security adjusts amounts exempt from the income test
If you receive retirement benefits from Social Security before reaching the age of retirement complete, the program can reduce 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.
