Fasten your seatbelts; there will be curves, or rather changes, in 2025. The Social Security Administration (SSA) has already announced the changes it will make this year, both for retirees and those receiving disability payments.
And there will be curves because the administration must address future economic challenges.
COLA Adjustment
The COLA is the Cost of Living Adjustment, which is an additional amount added to all Social Security payments to compensate for the impact of inflation on beneficiaries’ pockets.
In this way, it compares prices from the third quarter of the previous year to current prices and calculates a money loss margin, which it then adds to its payments so that beneficiaries do not lose purchasing power and can continue to live peacefully despite price increases.
For you, this means that if you receive Social Security benefits, your monthly check will increase slightly. This year, it will be 2.5% (meaning that a small percentage will be added to your base SSA salary).
It is not a large number, but it indicates that we are gradually approaching economic stability and exiting the inflationary cycle.
And, no, when we achieve economic stability, they will not deduct anything from your salary; they will simply pay you the base salary, as it was before the country was plunged into this wave of inflation.
Changes in retirement age
Unfortunately, the full retirement age will no longer be 66 but 67 (for those born after 1960), and it may even be extended to 70 if the individual wishes to add an 8% more benefit to their retirement payment, or to 62 but the amount you should receive will be reduced by up to 30%.
This change is mainly due to the fact that the quality of life is now much better and, as a result, life expectancy increases, so it would be unfeasible to continue retiring at the age of 65.
What do you need to know if you want to retire?
- If you retire early, the amount of your benefits will be reduced
- If you retire later, the amount of your benefits will increase
Consult a specialized financial advisor to choose the plan that best suits your case, since not everyone can work until they are 70 years old.
There will be changes to contributions
Taxable income will also be adjusted. The limit was $160,200 per year in 2024, but it will increase to $176,100 in 2025, implying that those who earn more will contribute more to the system.
Is this affecting you? If your income exceeds this threshold, you will be taxed on a larger portion of your earnings!
What happens if I want to apply for my benefits?
You will need these three documents correctly:
- Proof of citizenship: (a birth certificate or passport)
- Verification of age (birth certificate or medical records)
- Valid ID (driver’s license or updated state card)
How will these changes affect you?
Although the program’s main rules remain unchanged, these changes may impact your payments and requirements.
It is critical to stay informed in order to avoid surprises, so visit the SSA portal for updates and personalized advice to ensure that new developments imposed by the SSA do not catch you off guard.
And, while it may seem far away now, Social Security will be a part of you in a few years. The future is approaching quickly, and it is best to be prepared so that you can fully benefit from SSA. Let retirement be our ultimate period of relaxation!
Also See :- Say goodbye to Social Security – this is the SSA’s new mandatory requirement to continue receiving payments
