With the new year approaching, now is a good time for Social Security recipients to consider the new changes that the Social Security Administration (SSA) is implementing and how they will affect their lives and benefits in the future.
Because benefits are such an important part of the lives of over 70 million people across the country, knowing how the changes will affect them ahead of time will save a lot of hassle in the long run.
Calculate your new Social Security check amount following the new COLA.
Calculate your new Social Security check amount after the new COLA
Every year, all benefits receive a cost-of-living adjustment (COLA). In 2025, this adjustment will be a 2.5% increase in all Social Security benefits, including retirement benefits.
Calculating our new benefit for 2025 using the COLA is simple: take your last payment, apply the 2.5%, and add the result to your benefit. In case you don’t know how to do that, the average retirement benefit will increase by $47 per month.
Make sure you are aware of the 2025 benefits calendar
The overall formula for determining when your payment will be delivered does not change from year to year; SSI benefits will continue to be distributed on the first of each month (though the first payment will be distributed on December 31, 2024 due to the weekend and national holiday rule), and the rest of benefits will continue to follow the same staggered schedule.
Recipients with birthdays on the 1st-10th of the month will receive their benefits on the second Wednesday of each month, those born on the 11th-20th will receive payouts on the third Wednesday, and those born on the 21st-31st will receive payments on the fourth Wednesday. The National Holiday date change continues to apply to these benefits.
Double-Check Your Full Retirement Age
If you plan to retire in 2025, make sure you have the correct retirement age, as most people are between the ages of 66 and 67. If you were born before 1959, you are safe; however, if you were born in that year, remember that your full retirement age is 66 and 10 months.
If you were born in 1960 or later, your full retirement age is 67, so you still have a year to go before receiving full benefits.
Determine Your Income Tax Obligation
Before the end of 2024, you should calculate your potential federal income taxes on Social Security benefits, especially if you have other income sources. Approximately 40% of Social Security recipients owe federal taxes on their benefits, primarily because of additional “provisional income” from sources such as wages, interest, investment returns, and dividends.
Social Security taxes are calculated using your provisional income, which is equal to the sum of your adjusted gross income (AGI) plus nontaxable interest and half of your Social Security benefits. The amounts differ between single filers and married people filing jointly:
Single Filers:
- Provisional income less than $25,000: No taxes on benefits.
- $25,000–$34,000: Up to 50% of benefits taxable.
- Over $34,000: Up to 85% of benefits taxable.
Married Filing Jointly:
- Provisional income less than $32,000: No taxes on benefits.
- $32,000–$44,000: Up to 50% of benefits taxable.
- Over $44,000: Up to 85% of benefits taxable.
Review the ‘Earnings Test’
Working while receiving Social Security benefits may result in reduced payments before reaching full retirement age due to the earnings test. If you are under full retirement age for the entire year, the SSA will deduct $1 for every $2 earned above the annual limit.
In 2024, the limit is $22,320, which will rise to $23,400 by 2025. If you reach full retirement age in 2025, the SSA deducts $1 for every $3 earned above a higher limit. Earnings are only counted before the month of full retirement age. For 2025, the higher limit is $62,160 (up from $59,520 in 2024).
