With the new year approaching, now is a good time for Social Security beneficiaries to consider the new changes that the Social Security Administration (SSA) is adopting and how they may influence their lives and benefits in the future.
Because benefits are such an important aspect of the lives of over 70 million people throughout the nation, understanding how the changes will effect them ahead of time can save a lot of hassle in the long run.
Calculate your new Social Security check amount after the new COLA
Every year, all benefits get a cost-of-living adjustment (COLA). In 2025, this adjustment will be a 2.5% increase in all Social Security payments, including retirement benefits.
Calculating our new benefit for 2025 using the COLA is simple: take your previous payment, apply the 2.5%, and add the result to your benefit. In case you don’t know how to accomplish that, the average retirement pension will rise by $47 per month.
Make sure you are aware of the 2025 benefits calendar
The overall formula for determining when your payment will be delivered does not change from year to year; SSI benefits will continue to be distributed on the first of each month (though the first payment will be distributed on December 31, 2024 due to the weekend and national holiday rule), and the rest of benefits will continue to follow the same staggered schedule.
Recipients having birthdays on the 1st-10th of the month will get their benefits on the second Wednesday of each month, those born on the 11th-20th will receive payouts on the third Wednesday, and those born on the 21st-31st will receive payments on the fourth Wednesday. The National Holiday date change continues to apply to these benefits.
Double-Check Your Full Retirement Age
If you want to retire in 2025, be sure you have the correct retirement age, since most individuals are between the ages of 66 and 67. If you were born before 1959, you are secure; nevertheless, if you were born in that year, remember that your complete retirement age is 66 and 10 months.
If you were born in 1960 or after, your full retirement age is 67, so you still have a year to go before receiving full benefits.
Determine Your Income Tax Obligation
Before the end of 2024, you should evaluate your prospective federal income taxes on Social Security payments, particularly if you have additional income sources. Approximately 40% of Social Security recipients owe federal taxes on their benefits, mostly because of extra “provisional income” from sources such as earnings, interest, investment returns, and dividends.
Social Security taxes are calculated using your provisional income, which is equal to the sum of your adjusted gross income (AGI) plus nontaxable interest and half of your Social Security benefits. The amounts fluctuate between single filers and married persons filing jointly:
Single Filers:
- Provisional income less than $25,000: No taxes on benefits.
- $25,000–$34,000: Up to 50% of benefits taxable.
- Over $34,000: Up to 85% of benefits taxable.
Married Filing Jointly:
- Provisional income less than $32,000: No taxes on benefits.
- $32,000–$44,000: Up to 50% of benefits taxable.
- Over $44,000: Up to 85% of benefits taxable.
Review the ‘Earnings Test’
If you receive Social Security benefits while still working, the earnings test may cut your payments before you reach full retirement age. If you are under full retirement age for the whole year, the Social Security Administration deducts one dollar for every two dollars earned over the yearly maximum.
In 2024, the cap is $22,320, which will rise to $23,400 by 2025. If you reach full retirement age in 2025, the Social Security Administration deducts $1 for every $3 earned over a higher maximum, with earnings counting only before the month you reach full retirement age. For 2025, the higher maximum is $62,160 (up from $59,520 in 2024).
Also See: What Can You Purchase at Walmart Using SNAP Benefits? Tips to Maximize Your Allowance
