Posted on 08/05/2024 7:27:00 AM PDT by Red Badger
More than 50 million retired workers received a Social Security benefit in April 2024. Those monthly disbursements are often their largest source of income. Indeed, a recent survey from Gallup found that 88% of retirees depend on Social Security to some degree, and 60% said benefits were a “major source” of income.
The Social Security program undergoes certain changes annually to keep benefits aligned with inflation and general wage level. Given the important role benefits play in retirement, it is imperative that beneficiaries (and soon-to-be beneficiaries) stay informed. But a recent survey from Nationwide Retirement Institute shows that many Americans misunderstand basic aspects of the program.
Here are three Social Security changes coming in 2025 that may surprise many Americans.
1. Social Security benefits will get a cost-of-living adjustment (COLA) in 2025
Nationwide Retirement Institute recently reported that 70% of surveyed adults incorrectly agreed with this statement: “Social Security is not protected against inflation.” That statement is false. Social Security payments get an annual cost-of-living adjustment (COLA) to protect the purchasing power of benefits.
The COLA applied to benefits in any given year is based on how a subset of the Consumer Price Index (CPI) changes in the third quarter of the previous year, meaning the three-month period between July and September. To that end, the Social Security Administration cannot determine the official 2025 COLA until CPI data from September is published in mid-October.
However, based on current consumer pricing trends, The Senior Citizen League estimates that benefits will increase 2.7% in 2025. But the nonprofit senior advocacy group has already revised its forecast higher several times due to hotter-than-expected inflation in recent months, meaning the official 2025 COLA could be higher.
However, assuming Social Security benefits do indeed get a 2.7% COLA next year, the average monthly benefit for retired workers would increase by about $51, bringing the total to $1,967.
2. Some workers will have more Social Security taxes withheld from their paychecks in 2025
According to Nationwide, 74% of surveyed adults incorrectly agreed with the following statement: “Workers pay Social Security taxes on all of their income.” That statement if false. Current law caps the income subject to Social Security payroll tax. The maximum taxable earnings limit is $168,600 in 2024, meaning any income above that amount is not subject to taxation by the Social Security program.
The maximum taxable earnings limit is adjusted annually based on changes in the national average wage index. The official limit for 2025 will be published in mid-October, but the Social Security Board of Trustees estimates that the taxable maximum will be $174,900 next year. In that scenario, workers will pay up to $391 more in Social Security taxes in 2025.
To elaborate, the tax rate is generally 6.2%, meaning a worker with income exceeding $174,900 will have $10,844 withheld from their paychecks next year. But that same worker will have $10,453 withheld from their paychecks this year. The difference is $391.
3. Some Social Security recipients will have benefits withheld in 2025
According to Nationwide, 46% of surveyed adults incorrectly disagreed with the following statement: “Some of your benefits may be withheld if you’re still working before your full retirement age.” That statement is true.
Workers that receive Social Security may indeed have some of their benefit temporarily withheld if they are (1) under full retirement age and (2) their earnings exceed thresholds known as the retirement earnings test exempt amounts. There is a lower limit that applies to beneficiaries below full retirement age for the full year, and an upper limit that applies to beneficiaries that will reach full retirement age during the year.
Currently, the lower limit is $22,320 and the upper limit is $59,520. That means beneficiaries under full retirement age in 2024 will have $1 in benefits withheld for every $2 in earnings that exceed the lower limit. Similarly, beneficiaries that will attain full retirement age in 2024 will have $1 in benefits withheld for every $3 in earnings that exceed the upper limit.
The official retirement earnings test exempt amounts for 2025 will be calculated based on changes in the national average wage index and published in mid-October. However, the Social Security Board of Trustees estimates that the lower limit will be $23,280 and the upper limit will be $61,800. Put differently, benefciaries under full retirement age will be able to earn more income before benefits are withheld next year.
Importantly, the retirement earnings test amounts no longer matter once a Social Security beneficiary reaches full retirement age. Additionally, any benefits withheld before full retirement age are gradually repaid, such that retired workers typically recoup most or all of the money over a normal lifespan.
These are hardly “big changes”
They are standard adjustments that happen every year.
“3 Big Social Security Changes Coming in 2025 May Surprise Many Americans”
Thanks for the click-bait ...
So, it appears that a side-benefit of phony low inflation numbers, is that SS outlay increases are avoided.
so the cost of living goes up 15% and Sociable Insecurity pensions go up 1.5%
sorry, guys, but we see through that kinda “inflation protection”
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Note there was no mention or discussion of the difference between the rate of inflation and the COLA in article. It was conveniently ignored.
👍
Who doesn’t know this?
People who don’t pay attention ...................
Anyone who tells you otherwise is either delusional or lying.
Think how healthy SS funding would be if not for the Dem giving it away to people who never paid into the system...
Stop using SS as a way to buy votes!
There is so much fraud in the system that it will collapse. Parents getting ‘crazy checks’ by having their children act like morons so they can get benefits, is just one scam that’s going on.
Any time there is ‘free money’ to be had, scammers will figure out a way to get it...............
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THE COLA change never includes food/fuel, etc.
INFLATION==above 15%.
We get a 2.7% increase.
Importantly, the retirement earnings test amounts no longer matter once a Social Security beneficiary reaches full retirement age.
Your ‘full retirement age’ is different for different people depending on your birth year.................
If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520.
Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.
Too much "news" clamoring for clicks. Most of it serves only to keep some of the sheeple stirred up and scurrying around.
Go to their website, it looks like they are selling smoke.
I’m taking mine in April
and of course, part b will go up and result in probably extra $25.00 per check. Insane.
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