About 96.7% of people between the ages of 60 and 89 get money from Social Security. In August 2024, the average monthly payout for retired workers was only $1,920. However, for many people, Social Security is a big source of income.
On the truth, the program gives half of the total salary of people aged 65 and up. A rough guess is that about 25% of these people get 90% or more of their income from Social Security.
The Social Security Administration has said that it will no longer be raising benefits based on the cost of living for the next year. This may be good news for people who depend on Social Security. Right now, it is higher, though maybe not quite as high as the people who will benefit had hoped.
People who are retired should read this to learn about the changes that will happen to their Social Security payments at the start of 2025. Pay close attention, because some things will be different from what was agreed upon.
2.5% benefit increase
Benefits from Social Security and Supplemental Security Income (SSI) will go up next year. It will be 2.5% more for about 73 million Americans. That’s about $50 more a month if we break it down.
If you get $1,920 a month from Social Security, you’ll get about $1,968 (2.5% of $1,920). This will start in January. If you get SSI, your payouts will go up on December 31, 2024.
In fact, in 2024, the COLA went up by 3.2%. In the past 10 years, it has been stable at about 2.6%.
Advantages of Increase and Inflation
The main goal is to not fall behind inflation, even if 2.5% is not seen as a big number. The average rate of inflation for the year ending in September 2024 was 2.4%.
It’s possible that the 2.5% rise will be a part of the inflation in 2025. This shows that the amount of the income will rise with the cost of living.
Taxable income will increase
Some other changes will be made to Social Security at the start of January. For example, the highest amount of income that is taxed will go up from $168,600 to $176,100. This change won’t be as important for people who are already retired, but people who are getting close to retirement age should know about it.
At the moment, the tax rate on Social Security is 12.4%, with 6.2% going to the employee and 6.2% going to the company. Employees will pay up to $10,918.20 in 2025 instead of getting $10,453.20 for the same work. The other worker will have to be paid $10,918.20 by the boss.
Don’t forget that self-employed people will still have to pay the full 12.4% on their own. Because of this, they will need to pay $21,836.40 a year in Social Security tax. But this tax will only be put on the first $176,100 of a person’s income.
Notices go out in December
As early as the beginning of December 2024, if you get Social Security, you should get a reminder of your final income. In contrast to past years, the COLA statement will be easier to read and anyone should be able to get to it.
If you want to learn more
The first thing you can do is use your My Social Security account to keep track of the COLA letter. You don’t have to wait for the warning to come in the mail. You can also get updates by email or text.
Medicare is going to change in 2025. To learn more, go to Medicare.gov. If you get both Social Security and Medicare, you can check your new payment amount in the message center for both. The change will start at the end of November.
Also See:- The 5 big changes that will affect Social Security benefits in 2025
