Change can be scary, especially when it happens suddenly or unexpectedly. But change is also a part of life and can sometimes bring positive outcomes. In this article, we will discuss three expected changes to Social Security in 2025 that could benefit recipients. These changes are part of the yearly policy updates aimed at ensuring that both recipients and contributors get the best conditions suited to today’s world.
Expected Increase in Social Security Benefits
Every year, Social Security benefits usually get an annual cost-of-living adjustment (COLA) to help keep up with rising living expenses. This adjustment isn’t always the same and depends on the inflation rate from the previous year. In 2025, Social Security benefits are expected to increase.
Despite high inflation in 2022, inflation has been more manageable in 2024. This means that benefits will likely go up, although the exact amount isn’t known yet. The Senior Citizens League, a group focused on issues affecting seniors, predicts a 2.57% COLA for 2025. This is a bit lower than the 3.2% increase seen in 2024 but still a significant rise.
Increase in Maximum Monthly Benefit
Social Security taxes are only applied to a certain amount of wages, and there is also a limit on the benefits that can be received. In 2024, the maximum benefit for someone retiring at full retirement age is $3,822 per month. This amount is expected to increase in 2025.
Only high earners who have contributed the maximum amount for 35 years can get the highest monthly benefit. If you are one of these high earners and plan to retire in 2025, you can look forward to a higher maximum monthly benefit. However, if you didn’t contribute the maximum amount every year, your benefit will be lower. Even so, it will still be a worthwhile amount.
Higher Earnings-Test Limit
Many people think that you can’t work while receiving Social Security benefits, but that’s not true. You can work and get benefits at the same time. However, if you are below full retirement age and earn more than a certain amount, part of your benefits may be withheld.
In 2024, the earnings-test limit is $22,320 for those below full retirement age. For people reaching full retirement age during the year, the limit is $59,520. These limits are expected to increase in 2025, allowing beneficiaries to earn more without losing benefits. Any benefits withheld because of the earnings-test limit will be added back to your monthly payments once you reach full retirement age.
In 2025, Social Security recipients can look forward to several positive changes. Benefits are expected to increase, the maximum monthly benefit will likely go up, and the earnings-test limit will rise. These updates aim to improve the quality of life for Social Security beneficiaries, making it easier for them to keep up with living costs and continue working if they choose.
Frequently Asked Questions (FAQs)
1. What is the expected COLA increase for Social Security benefits in 2025?
The Senior Citizens League predicts a 2.57% cost-of-living adjustment (COLA) for 2025.
2. How much is the maximum monthly Social Security benefit for 2024?
In 2024, the maximum monthly benefit for someone retiring at full retirement age is $3,822.
3. Can I work and receive Social Security benefits at the same time?
Yes, you can work while receiving Social Security benefits. However, if you are below full retirement age and earn more than a certain amount, part of your benefits may be withheld.
4. What is the earnings-test limit for 2024?
In 2024, the earnings-test limit is $22,320 for those below full retirement age and $59,520 for individuals reaching full retirement age during the year.
5. Will the earnings-test limit increase in 2025?
Yes, the earnings-test limit is expected to increase in 2025, allowing beneficiaries to earn more without losing benefits.