As we approach the end of the year, Social Security beneficiaries should prepare for key updates effective in 2025. While the final cost-of-living adjustment (COLA) won’t be revealed until October, there are significant changes to anticipate. Here’s what you need to know:
1. Full Retirement Age Adjustments
In 2025, the Full Retirement Age (FRA) will increase to 66 years and 10 months for individuals born between 1955 and 1960. For those born in 1960 or later, FRA will be 67. Early retirement at age 62 will result in reduced benefits, but delaying retirement until FRA or beyond can increase monthly payments. Working past FRA and delaying benefits until age 70 can further boost your retirement income.
2. Expected COLA for 2025
The 2025 COLA is projected to be 2.57%, a decrease from previous years due to slowing inflation. Although this adjustment helps, it may not fully offset rising costs in housing, food, and utilities. The final COLA figure will be confirmed in October based on updated inflation data.
3. Increased Wage Cap for Social Security Taxes
In 2025, the wage cap for Social Security taxes will rise, impacting higher income earners. The cap for 2024 is $168,600, and it will likely increase further in 2025. To qualify for Social Security benefits, you need to accumulate 40 work credits, with one credit requiring $1,730 in wages or self-employment income in 2024. This wage cap is linked to inflation and affects how much you pay in Social Security taxes.
Prepare for these changes to maximize your benefits and manage your Social Security income effectively in 2025.
Source – lagradaonline
