The cost of living adjustment is just one of the changes
of ConsumerAffairsSocial Security recipients are getting a cost-of-living adjustment, starting this month, but thats not the only change to the nations retirement system. There are at least four other changes that are taking place in 2025.
As for the COLA, Social Security recipients will see a 0.25% increase in their monthly check this montrh. Thats based on inflation data for July, August and September 2024. Supplemental Security Income recipients should have received their first 2025 payment on Dec. 31, 2024.
Earnings requiement
Beginning in 2025, the earnings requirement for workers to earn their 2025 Social Security work credits is going up slightly. Workers now need 40 work credits to qualify for retirement benefits but can only earn up to four credits per year.
Last year, workers received one credit for every $1,730 they earned. But in 2025, it'll take $1,810 in earnings to secure one credit.
More income subject to tax
Upper-income employees will see their Social Security payroll tax go up this year because of an increase in the amount of wages subject to the tax. In 2024 wage earners paid the tax on the first $168,000 of income. In 2025, they will be taxed on the first $176,100 of income.
Some people start drawing Social Security at age 62 but continue to earn a salary. This year those workers can earn a little more before it reduces their Social Security payment. Workers who are at the full retirement age, however, will not be penalized, no matter how much they earn.
Last year, workers under the full retirement age lost $1 for every $2 they earned over the $22,320 limit. This year, the threshold is$23,400.
Full retirement age still rising
Finally, the Social Security full retirement age is going up to 66 and 10 months for people born in 1959. The age has been gradually rising and will level off when it reaches age 67.
For those turning 62 in 2025 and who are considering claiming their Social Security benefits, understanding how that will affect benefits is a key consideration. It can reduce the amount of the benefit you would have received at full retirement age by up to 30%.
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Posted: 2025-01-07 13:23:23
