Big changes retirees can expect – Social Security checks starting in 2025

Whenever new legislation or proposed changes affecting Social Security checks are announced, millions of seniors worry about their financial stability. After a lifetime of hard work, any shift in their monthly benefits significantly impacts their quality of life. Social Security provides a safety net, ensuring a minimum income level in old age and promising a respectable degree of comfort and dignity in retirement. Therefore, knowing the upcoming changes by the Social Security Administration (SSA) is essential for retirees to manage their monthly income effectively.

Changes

Over 50 million retirees rely on Social Security checks for their living expenses and to keep pace with inflation. According to a Gallup poll, 88% of retirees depend on Social Security to some extent, with 60% identifying it as their primary income source. Consequently, changes in Social Security checks, annual increases, taxes, and potential cuts due to future system shortages could all influence retirees’ paychecks. While it’s too early to confirm benefit cuts, retirees should consider alternative income sources. For now, let’s focus on three significant changes confirmed by the SSA for 2025.

COLA

Experts have been forecasting the cost of living adjustment (COLA) for 2025, with estimates ranging between 2.5% and 3%. However, the Senior Citizens League (TSCL) projects a 2.63% COLA increase for 2025. If this prediction holds, beneficiaries will see a 2.63% increase in their Social Security checks starting January 2025. Here’s a breakdown of the new checks per program with the 2.63% increase:

Program	Average Payment	Age 62	Age 67	Age 70
Retirement Benefits	$1,950	$2,781	$3,923	$5,001
Survivor Benefits	$1,505	$1,773	N/A	$3,653
SSDI Benefits	$1,577	$2,658	N/A	$3,923
SSI Benefits	$716	$968	$1,452	$484

Social Security Taxes

The Nationwide Retirement Institute found that 74% of adults mistakenly believe that Social Security taxes apply to all earnings. Currently, payroll tax income is capped at $168,600 for 2024, with annual adjustments based on the national average wage index. The SSA projects a taxable maximum of $174,900 in 2025. This change will result in an additional $391 in Social Security taxes for workers. Employees earning over $174,900 will see $10,844 deducted from their paycheck due to the 6.2% tax rate, compared to $10,453 in 2024.

Benefits

In 2025, workers under full retirement age (FRA) whose wages exceed the retirement earnings test amount may have their Social Security checks temporarily withheld. For beneficiaries below FRA, the lower limit is $22,320, and the higher limit is $59,520. For every $2 earned above the lower limit, $1 in benefits will be withheld. The retirement earnings test exemptions for 2025 will adjust based on changes in the national average wage index, allowing those below FRA to earn more than the $23,280 floor and $61,800 ceiling. Once a beneficiary reaches FRA, the retirement earnings test no longer applies, and withheld benefits are gradually repaid.

Upcoming changes to Social Security in 2025 will impact retirees in several ways. With a smaller-than-expected COLA increase, higher Social Security taxes, and potential temporary withholding of benefits, it’s crucial for retirees to stay informed and plan accordingly. Considering alternative income sources and knowing these changes can help maintain financial stability and ensure a comfortable retirement.

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