More than 50 million retired workers received a Social Security benefit in April 2024. Those monthly disbursements are often their largest source of income. Indeed, a recent survey from Gallup found that 88% of retirees depend on Social Security to some degree, and 60% said benefits were a “major source” of income.
The Social Security program undergoes certain changes annually to keep benefits aligned with inflation and general wage level. Given the important role benefits play in retirement, it is imperative that beneficiaries (and soon-to-be beneficiaries) stay informed. But a recent survey from Nationwide Retirement Institute shows that many Americans misunderstand basic aspects of the program.
Here are three Social Security changes coming in 2025 that may surprise many Americans.
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1. Social Security benefits will get a cost-of-living adjustment (COLA) in 2025
Nationwide Retirement Institute recently reported that 70% of surveyed adults incorrectly agreed with this statement: “Social Security is not protected against inflation.” That statement is false. Social Security payments get an annual cost-of-living adjustment (COLA) to protect the purchasing power of benefits.
The COLA applied to benefits in any given year is based on how a subset of the Consumer Price Index (CPI) changes in the third quarter of the previous year, meaning the three-month period between July and September. To that end, the Social Security Administration cannot determine the official 2025 COLA until CPI data from September is published in mid-October.
However, based on current consumer pricing trends, The Senior Citizen League estimates that benefits will increase 2.7% in 2025. But the nonprofit senior advocacy group has already revised its forecast higher several times due to hotter-than-expected inflation in recent months, meaning the official 2025 COLA could be higher.
However, assuming Social Security benefits do indeed get a 2.7% COLA next year, the average monthly benefit for retired workers would increase by about $51, bringing the total to $1,967.
2. Some workers will have more Social Security taxes withheld from their paychecks in 2025
According to Nationwide, 74% of surveyed adults incorrectly agreed with the following statement: “Workers pay Social Security taxes on all of their income.” That statement if false. Current law caps the income subject to Social Security payroll tax. The maximum taxable earnings limit is $168,600 in 2024, meaning any income above that amount is not subject to taxation by the Social Security program.
The maximum taxable earnings limit is adjusted annually based on changes in the national average wage index. The official limit for 2025 will be published in mid-October, but the Social Security Board of Trustees estimates that the taxable maximum will be $174,900 next year. In that scenario, workers will pay up to $391 more in Social Security taxes in 2025.
To elaborate, the tax rate is generally 6.2%, meaning a worker with income exceeding $174,900 will have $10,844 withheld from their paychecks next year. But that same worker will have $10,453 withheld from their paychecks this year. The difference is $391.
3. Some Social Security recipients will have benefits withheld in 2025
According to Nationwide, 46% of surveyed adults incorrectly disagreed with the following statement: “Some of your benefits may be withheld if you’re still working before your full retirement age.” That statement is true.
Workers that receive Social Security may indeed have some of their benefit temporarily withheld if they are (1) under full retirement age and (2) their earnings exceed thresholds known as the retirement earnings test exempt amounts. There is a lower limit that applies to beneficiaries below full retirement age for the full year, and an upper limit that applies to beneficiaries that will reach full retirement age during the year.
Currently, the lower limit is $22,320 and the upper limit is $59,520. That means beneficiaries under full retirement age in 2024 will have $1 in benefits withheld for every $2 in earnings that exceed the lower limit. Similarly, beneficiaries that will attain full retirement age in 2024 will have $1 in benefits withheld for every $3 in earnings that exceed the upper limit.
The official retirement earnings test exempt amounts for 2025 will be calculated based on changes in the national average wage index and published in mid-October. However, the Social Security Board of Trustees estimates that the lower limit will be $23,280 and the upper limit will be $61,800. Put differently, benefciaries under full retirement age will be able to earn more income before benefits are withheld next year.
Importantly, the retirement earnings test amounts no longer matter once a Social Security beneficiary reaches full retirement age. Additionally, any benefits withheld before full retirement age are gradually repaid, such that retired workers typically recoup most or all of the money over a normal lifespan.
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Unfortunately, the CPI is usually grossly inaccurate for the inflation put on elders on SS. During the outbreak of the plandemic, the cost of living for seniors often doubled or tripled, and still is at that amount today. They have never gained ground or regained their losses of their SS. However, people are finally waking up to the inept administration, and realize it is them that cause our horrific inflation.
Whatever you get in a Cola rase is then taken back in an increase to your Medicare payment so, you don’t get any cost-of-living rase.
re #3 If you are working before full retirement age and do not exceed the lower limit, nothing is withheld.
Yes, but if you do still work from age 62 to 65 than you are paying twice for the earnings you paid for before age 62. And than you pay for the earning at a 50% tax rate on the money you earn while retired from age 62 to age 65.
Cost of living increase is a joke. Inflation is much higher than what the current regime is stating. Food and gas have increased by more about a third of what it was three years ago. People on fixed incomes can barley make it from one month to the next on Social Security alone. We already paid taxes on income all of our lives and we shouldn’t be paying any taxes on Social Security now.
Agree ????%.
Social security was not supposed to be taxed. (Neither was your SS number be used for identification)
We can thank Joe Biden for the tax. In 1983 he voted for a 50% tax, and he was the deciding vote 1993 to raise it to 85%!
The President who approved it was Ronald Reagan. Biden was just one of many in congress. Since the Federal government spent the social security money in the general coffers for decades something had to be done. No one liked the changes but even so the money was still not separated and invested so here we are again running out of money. And now with the RMD many seniors have to pay federal income tax on 85% of SSI payments!
What a shame! The taxpayers always suffer the consequence to overspending by the government!!!
Why was the government allowed to touch Social Security monies to begin with?! The people earned it and were supposed to be awarded what they contributed at retirement age. This is unbelievable!
So, are you a clueless Biden-hater or just another disinfo-spreading Russki?
Be sure and let me know how you feel when President Musk DECREASES our SS checks. You’re living in a dream. A BAD ONE, and it’s about to get WORSE. Wait and see. You don’t matter, I don’t matter…..only BILLIONAIRES matter. Are you a billionaire Mary????
You have got it all wrong Mr. Demonrat! Get back to me when you find out you lied to people.
Haha! You sound just like the idiots rallying in Washington about Musk finding big bucks of wasteful spending with the taxpayer’s money! Why are they upset instead of celebrating the end of wasteful spending?! Instead they’re trying to make this great discovery a bad thing! Why would that be? It doesn’t take a genius to figure out the answer. But here you are believing the lies of the Demonrats!! ????♀️
Oh, both parties suck by now. Americans just don’t get it, and today, JD Vance told Putin that US troops could be stationed in Ukraine,if he doesn’t accept the latest ” peace plan.” This while drones are going all over, looking at military bases here. If we go to war with them, will there even be a Social Security??
Barley make it or barely make it? FYI, barley is a grain.
Same BIG changes happen every year unless there is no COLA. A change I would like to see is everyone should receive the same amount not a percentage of what they already get. My SS is above average so I get a higher increase than people with below average SS. I might get a $100 increase while someone with a below average SS gets $50. Make the amount $75 for everyone.
so you worked hard and they didnt, what you promote is liberalism. that sucks! you should encourage people to work hard and earn more. what you support is what is killing the American way.
I worked dang hard, most of the time working two jobs and sometimes 3, in the field of medical transcription. I made decent money and then the bottom fell out of the industry. I made a move to the chiropractic field and didn’t make as much, and tutored children on the side. I’d take $75 any time instead of what I’ll be getting. And don’t tell me I didn’t work hard. I worked like a dog.
I highly disagree with you! There are MANY reasons why a person did t earn big bucks! I’ll speak for myself that I come from a very large family. The boys went to college because the man provides for his family. I wasn’t given the opportunity to go to college. At that time, no one knew about student loans. Now that’s part of Junior year, to learn how you can afford and go to college. I worked my way up at the company I worked for at the time. Than I got married, had children, was on the board of whatever I could help out with, took care of the home, meals…..everything a housewife & mom should do. I loved every minute of it! It’s too bad I didn’t get a paycheck for doing my utmost excellent work! I worked straight thru the weekend at times, was a nurse, a financial advisor, a psychologist, an interior designer, a plumber and whatever other hats I needed to fill. When my children were all in school full time, I got back into the work force. So please, think before you speak!!
the reality is that all people are not equal, some are not capable of earning more no matter how hard they work, that is just the way it is. that being said, if the money paid in had been invested properly everybody would have had more, instead as we the people are finding out, (many already knew) our government is wasting and allowing the money ,that we entrusted to them , is being squandered, if not outright stolen from us!!!
At a cost-of-living adjustment we end up with less. Insurance increases higher, med premiums higher, pharmacy meds higher. Lose medicare benefits. Medicare needs to be turned over to someone that knows what they’re doing.
It looks like you’re going to get your wish, Elon Musk is looking for that job, do you think he knows what he’s doing?
Absolutely! That would be that Musk fellow!
Medicare, Medicaid, ACA, Vet’s Care, all insurance program costs are based on “standard of care” and the standards are based on what type of problem you have and where it fits in the International Classification of Diseases (ICD V 11) put out by the World Health Organization.
Then we need to disavow ourselves from the World Health Organization. They are apart of the global Cabal know as the One world Government
COLA adjustments should be based on a zipcode CPI.
I live in one of the most expensive zip codes in America, but having moved there 50 years ago, when it was derelict and long before gentrification, I now live at the poverty line. To base COLA adjustments on zip codes would be unfair. I’d have to leave the city.
It is misleading to have a link to the 10 stocks to own and then require a paid subscription in order to have them disclosed
What a joke the COLA is ! For me, after the miniscule 2+ increase , the medicare is raised (and more benefits taken away or increase in price), so that my net gain each so called raise, is somewhere between $2 to $11 per month. WHOOPEE
Now you can take that trip to Hawaii.
Because interest rates increased I finally got some return on cash investment last year which kicked me into a higher Medicare bracket. My SS benefit dropped $1500/yr. as a result, after paying new health insurance premium.
I was (Motley) Fooled once years ago and it won’t happen again.
The first statement needs one more word to be completely true – “Social Security is not protected against ACTUAL inflation.”
Got to love the hidden messages in your face! Who is Motely Fool? The king’s clown! and regime has kept 99% of the population enslaved leading the sheep to believe collecting taxes was legal. These thieves know how to word their bs so the average Joe reads “only $1 is taken from the LOWER end. BUT THAT EQUALS 50% of your earnings are going into their pockets. On the UPPER end these thieves are taking $1 out of $3 which is equivalent to 30% of your earnings! This doesn’t include all the bs taxes collected for all other purchase’s!” If you do the math you are only getting .30¢ for every $1 you work for. Meaning if you’re only grossing $22,000 annually in reality you are only netting $6,600. Stand up and say “NO to the oligarchs!”
COLA was withheld during the Obama admin. I get military compensation check, a version of ssd(i think). When seniors get a pay raise I get one too. VA rated me at 50%, $1079 a month. You would think 50% should be half of 100%, but VA math is weird. An old service connected injury has caught up to me at 55, knee cartiledga torn. The pain is worse than a kidney stone or gall bladder stone or a torn rotor cuff tear, which I got before the knee went out. Shoulder is not rated by VA as service connected. I did enjoy that Biden-Harris cola raise, but I know that money comes from the backs of hard working taxpayers.
Better save for your own retirement and stop asking for increases in Social Security. SS is a Ponzi scheme at the highest level. It requires an increase in workers and an increase in the income level that pays into the fund. As it is, the fund is set to be broke in about 12 years. We already paid tax on the earnings when we worked. Now we get taxed on the money again when you collect SS. Not fair! They have not changed the income level where they start taxing SS since it started.
By no means am I defending the SS administration or corupt politicians, but, SS is a pre-tax deduction. Put plainly, it is not taxed when it is paid. It is taxed when disbursed. What is left of it.
Well I hope I get (that approximately $51)
in January of 2025, because I need it badly!
between the 2 of us $27,048….and he’s a
Veteran!
BUT United Health Sr Care Options ❗️DROPPED ❗️
me in the middle of Extensive Dental work.
Why? We make too much $ ‼️
No more Medicaid plus I lost $125 a month
for food @ Walmart. Yup DROPPED ME
Check annually for reported income before full retirement age. SSA sent a letter saying I owed the thousands of dollars because income (not mine) was reported on my SSA number. It is easy to do in the SSA web account.
It is time for the retired to lobby for changes in Social Security. Specifically. 1) No Reduction in the SS Payments for income that is earned past retirement age. Argument: Those new wages are taxed already include SS, the amount that the recipient receives is base on PAST Earnings that were paid into the system in some cases over 40 years, scaled by age of benefits. 2) Remove the ceiling on SS Tax for wages (but cap the benefits for payout) to the median wage for the country. That way payments will be received for above 130k but the payout will be scaled to ensure the program is not bled dry at payout time. 3) Remove the reporting and taxation of SS Payments. The government already taxed these dollars (by force) and on the open market the same investment would have resulted in 100x the amount of money to the recipient. To include those wages in tax calculations, and penalize anyone who does decide to continue working is not only immoral it amounts to Government Theft. 4)No Union, Government Entity may exempt itself for SS payments. Some of you would be surprised to learn that Teachers and government officials in some states do not pay SS taxes. It is time to END this practice going forward.
But if they don’t pay into Social Security, those quarters are not counted toward their Social Security payments. I have 2 years of teaching in Connecticut that are not included in my SS payments because I paid into CT retirement system those years, not into SS.
It doesn’t matter how much the raise for social security is as medicare always seems to go up enough to zero it out.
sso yet another way for trump to recup his court charges after found GUILTY
whats happening with america and democracy
You can be faked on up to 85% of your SS benefits but remember when you worked you contributed to SS with money you earned but your employer matched your contribution and you paid no tax on that free money. Therefore if your income is high enough you can be taxed up to 85% of the free money given to you. You still get @5% free.
yeah ss needs to be reviewed, many retired has children in other countries and the child and mother get ss if the father is 65 years old so we need to stop the bleeding. SS was created to protect the widows and orphans in time of war. Women from Thailand, Phillipines, Central America and many other places know who to play the game. So a 65 years old procreate needs to support their families. Also check on those people that had divorced 3 wives and the the husband and the 3 ex wives all are receiving SS.
Maybe someone should suggest the government pay back the ssa the over $2 trillion “borrowed” from ss with interest as promised. Most people don’t even know how much a trillion $ is. You could spend a million $ a day from the time Jesus lived till today and still have millions in the bank!
Correction, you would still have billions in the bank!
There is nothing NEW here. All three items are already in force.