Complete Guide to Social Security Changes: What Every Retiree Needs to Know
According to Lagradaonline, Approximately 96.7% of adults aged 60 to 89 receive Social Security benefits, which serve as a vital income source for many. As of August 2024, the average monthly benefit for retired workers was $1,920, highlighting the program’s significant role in supporting the financial well-being of millions.
Reliance on Social Security
For many older adults, Social Security is crucial for meeting their basic needs. About 50% of individuals aged 65 and older rely on Social Security for half of their total income, and around 25% depend on it for 90% or more of their income. This underscores the program’s importance in maintaining financial stability for retirees.
Upcoming Changes in 2025 Benefits
The Social Security Administration (SSA) has announced adjustments to benefits for the upcoming year. Notably, the cost-of-living adjustment (COLA) for 2025 will be 2.5%, which, while lower than beneficiaries might have hoped, will still provide some relief against inflation.
2.5% Benefit Increase
Starting in January 2025, Social Security benefits and Supplemental Security Income (SSI) payments will increase by 2.5% for nearly 73 million Americans. This translates to an approximate increase of $50 per month, meaning if your current benefit is $1,920, it will rise to about $1,968. SSI payments will also reflect this increase starting December 31, 2024.
Balancing Inflation and Benefit Increases
While a 2.5% increase might seem modest, it’s essential for keeping pace with inflation. Over the 12 months ending September 2024, inflation averaged 2.4%. The COLA increase is designed to help beneficiaries maintain their purchasing power in the face of rising living costs.
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Increase in Maximum Taxable Earnings
In addition to the benefit increase, there will be changes to Social Security taxable income. Starting in January, the maximum taxable earnings will rise from $168,600 to $176,100. This increase may not significantly impact current retirees but is important for those approaching retirement.
The Social Security tax rate remains at 12.4%, split evenly between employees and employers. For 2025, employees will potentially pay up to $10,918.20 in Social Security taxes, while self-employed individuals will bear the full 12.4% on their income, amounting to $21,836.40 annually, applicable only on income up to the new maximum.
Notifications and Information Access
Beneficiaries can expect to receive a notice detailing their final benefit amount as early as December 2024. Unlike previous years, the COLA statement will feature a simplified design for easier access and understanding.
Stay Informed
For those who wish to stay updated, it’s advisable to track your COLA notice online via a My Social Security account, which is quicker than waiting for a mailed notice. You can also sign up for email or text alerts for important updates.
Additionally, significant changes to Medicare are anticipated for 2025, so checking Medicare.gov for the latest information is essential. If you have both Social Security and Medicare, you can access a message center for both accounts to monitor your new benefit amounts, with updates commencing at the end of November.
