By Samuel Gonzalez
Jun 26, 2024, 17:58 PM EDT
When we talk about increases in Social Security, the first thing that comes to mind is more benefits in our pockets. And although that is part of one of the three aspects that we will address below, There are other increases that will take place in 2025 What you should keep in mind so that they do not take away your money.
1. Increase in Social Security COLA payments
Every year, Social Security beneficiaries are eager to learn about the cost of living adjustment (COLA). This data is released until October 2024 and applies from January 1, 2025The COLA is a calculation made by the Social Security Administration (SSA) to change the benefits it provides based on inflation, which causes, in most cases, an increase in monthly payments.
For example, In 2024, seniors’ checks increased by 3.2%.
While, The COLA increase for 2025 is not yet knownThe most recent estimates from the Senior Citizens League suggest the increase will be around 2.57%. That’s the lowest COLA since the 1.3% increase retirees got in 2021.
2. Increase in the full retirement age (FRA)
Full retirement age (FRA) is a standard measurement that allows the SSA to determine when you can receive 100% of your benefits. Currently, this age is in a range between 66 and 67 years, depending on your year of birth. Starting in 2025, the FRA will be 66 years and 10 months. It is the last year with a FRA lower than 67 years of age
For those who will turn 66 in 2024, the FRA is 66 and 8 months, since that is the FRA for anyone born in 1958. For those born in 1959 and who turn 66 next year will be forced to wait until you are 66 years and 10 months before getting your full benefit.
By 2026, anyone born in 1960 or later will have an FRA of 67 years, no longer minor. That means that until that age you will obtain the full benefits that correspond to you. Although you can claim it earlier, at age 62, you will receive less money; On the contrary, if you wait until age 70, you increase your monthly benefits by 8%.
3. Increase in Social Security taxes
The government sets a limit on the amount of income that will be taxed by Social Security. This helps determine the retirement benefits you will receive in the future. The more taxes you pay, the more money you will receive in your retirement. However, who likes to pay more taxes?
At the moment, the income tax limit is up to $168,600. This amount increases almost every year. For example, in 2023, workers paid Social Security taxes only on up to $160,200 of annual income.
According to interim projections from the Social Security Trustees, The amount you pay in Social Security taxes is likely to increase to $174,900 in 2025. Some workers who currently earn more than $168,600 could find themselves owing taxes on up to $6,300 more in income.
You may also like:
- Social Security: Why 70,000 people lose their benefits every year
- How much would the Social Security payment be in 2040 (with COLAs and cuts included)
- Social Security SSDI: SSA to make change so more disabled workers qualify