What Changes Are Coming To Social Security In 2025?
Imagine a future when you have worked, where you can always enjoy the fruits of your past labour without having to worry about how to make ends meet. This is where social security comes in. It is a program designed by the government to provide financial services to its citizens. You get the benefits you deserve when you need it most whether you are no longer there to provide for your family, or an unexpected injury changed your life. Here are several that are coming for social security in 2025.
1. Full Retirement Age
There are multiple changes to social security that retirees can expect an increase which usually changes with inflation. The highest amount each retiree receives largely depends on their age for retirement, length of time to pay into social security and the amount paid during those active years. If you turn 66 next year, you must wait until exactly 66 and 10 months to avoid these penalties. Retirees should take this adjustment into account when determining when to begin receiving Social Security checks.
2. Cost-of-Living Adjustment – COLA
The cost of living adjustments for 2025 will likely reduce as it is tied to inflation. Social Security recipients always receive a yearly COLA to shield their buying power from inflation. However, more than two-thirds of retirees surveyed by The Senior Citizen Leagues said the 3.2% COLA in 2024 was too small, meaning benefits did not increase enough to cover their elevated expenses. Unfortunately, these retirees will face more financial difficulties from 2025. Most retirees will be disappointed if social security benefits get 2.6 percent COLA in 2025, which explains why so many retirees are struggling to keep pace with inflation.
3. Increased Payroll Taxes for High Earners
Even though payroll taxes are the main source of funding for Social Security, those who earn Higher may not contribute all of their earnings to the program. However, a wage cap is used to decide how much income goes to social security taxes. Say for example, if the annual wage cap is set at #$168,000, someone who earns $200,000 annually will not pay their social security tax on their last $31,400 income. The yearly limit determines the yearly income threshold for the Social Security taxes
