The Social Security Administration (SSA) has said that there will be big changes starting January 1, 2025. The goal of these changes is to fight inflation and keep the finances of more than 70 million people stable.
If you are retired, have a disability, get VA payments, or depend on Social Security, you need to know about these changes in order to plan your financial future.
A Key Update on the Cost-of-Living Adjustment (COLA)
The Cost-of-Living Adjustment (COLA), which is meant to make sure that Social Security payouts keep up with inflation, is one of the most important changes. In today’s economic environment, this change is especially important because it
protects the ability of recipients to buy things.
- The rise that is predicted is about 2.5%.
- Its goal is to stop inflation from going up and keep the economy stable.
- The adjustment is based on facts from the economy in 2024.
Changes to Social Security in 2025
In January 2025, a number of important changes will become official:
How the full retirement age will change
Depending on the beneficiary’s birth year, the full retiring age could go up from 66 to 67 years old to 68 to 70 years old. This change makes the system work with longer life spans and makes sure it will last for a long time.
Higher limit on taxable income
The limit on taxable income will go up:
- From $20,200 in 2024 to $176,100 in 2025.This change expands the types of income that are taxed by Social Security, which means that more money is going into the system.
Who Does These Changes Help?
These changes will mostly touch two main groups:
Retirees
People who finished their working lives and depend on Social Security benefits will see changes to the amount they receive. The COLA increase will help them keep their buying power as living costs rise.
People who have disabilities
Individuals with disabilities who may not have a lot of money or are unable to work will get more money to meet their basic needs.
Why and how to get ready for changes to Social Security in 2025
To deal with these changes, you need to stay aware. Here are some ways to get ready:
- Think about how these changes might affect your monthly income and make changes to your budget as needed.
- Talk to financial experts or look into other ways to get the most out of your Social Security benefits.
The SSA is still committed to helping people and making sure they have enough money, even though the economy is changing quickly. If you know about these changes, you can take steps to protect your financial future in 2025 and beyond.