Possible Social Security Changes in 2025: what is social security? To maintain individual or family income or when some or more income are terminated, then to provide income, to incurre the exceptional heavy expenditure. Basically a percentage of a worker’s pre-retirement income is replaced , based on his lifetime earnings.
WHAT SOCIAL SECURITY CHANGES CAN YOU EXPECT IN 2025?
In the month of April 2024, an average social security check of $1,915.26 was collected by nearly 51 million retired worker beneficiaries. this social security checks played a crucial role in highering the financial foundation of retirees and helping them to survive and pay the exceptional bills ( eg. paying for health care, bringing up children ).
Reports from the last two decades says that between 80% and 90% of then current retirees rely on their social security checks in order to meet their basic expenses. considering these reports the annual changes that occur to America’s top retirement plans are important to current and future beneficiaries.
Beneficiaries may expect 4 changes to take place in 2025, that may influence the America’s top retirement program.
1) Cost-of-living adjustment( COLA ) of social security may increase beneficially.
Cost of living adjustment (COLA) is the most awaited social security change each year. In 2025 its expected that , there will be a modest increase in social security checks than in recent years . For the last three years beneficiaries took advantages of respective increase to their social security checks of 5.9%(2022), 8.7%(2023) and 3.2%(2024).
Nonpartisan senior advocacy group The senior citizens league made changes in its long term COLA forecast for 2025 from 2.6% to 2.66% , after the release of the April inflation report following the March report. So according to the calculation, In 2025 the average retired worker’s check would increase to $52 per month considering the fact that we haven’t reached the months that matter for the COLA calculation.
2) Next year high earners having portion of earning exempted would owe more in payroll taxes
The second most influential change for the retiree in 2025 is expected that high incomers will cerainly owe more in payroll tax.
12.4% payroll tax of social security is set for the uninvested income between $0.001 and $168,600. This 12.4% tax accounts for the 90% of the revenue of social security given to the eligible beneficiaries. Maximum taxable earnings cap are exempted from the payroll tax( salary earned above $168600 ) .
so basically if a person’s earning is less than $168600 and is paying into social security with every dollar they earn, but if a person earns more than $168,600 and have a portion of earning exempted , the it would mean owing more i payroll tax.
3) Once again , maximum monthly benefits of social security may increase
An estimated increase in maximum monthly payout for a worker can be seen in 2025 and it would be more than $3,822 . As a jump of $195 was seen in the maximum monthly payout of 2024 comparing it with the payout of 2023 .
The basic three criteria for qualifying and ensuring this maximum benefits are:
- A retirees must have worked for atleast 35 years.
- Workers must have reached or surpassed the maximum taxable earnings cap in all 35 years the SSA uses to calculate their benefit.
- Retirees have to complete their full retirement age to claim their benefits.
4) Qualifying for social security benefits will not be easier.
At last it would not be easier for the workers to avail their benefits of social security. These social security benefits are given to the citizens of United States through their work credits .
A worker must have 40 of these lifetime work credits to avail the benefits of the social security , with a catch that they can only earn 4 work credits per annum. The bars are set pretty low for these workers to earn these work point.
Gideon Adler is a finance expert and journalist. He holds an MBA degree in Finance and a bachelor’s degree in Mass Communication. Gideon’s hobbies include playing baseball and chess.