As the new year begins, many people are making changes to their jobs, healthcare coverage, and New Year’s resolutions. However, they may also need to adjust to changes made by the government regarding taxes, retirement accounts, and Social Security.
For retirees and workers, it’s essential to be aware of the five key changes affecting Social Security benefits in 2025:
1. A 2.5% cost-of-living adjustment (COLA) will be applied to December 2024 benefit payments, resulting in a January 2025 payment for those born on different days of the month.
2. Workers will need to earn more to qualify for retirement benefits, as the requirement for Social Security work credits has increased. In 2025, workers will need at least 40 credits, which translates to earning $1,810 per year, compared to $1,730 in 2024.
3. The taxable wage base for Social Security payroll taxes has increased from $168,600 to $176,100, potentially resulting in higher tax rates for some workers, especially high earners.
4. Earnings test limits have risen, allowing retirees working while claiming full retirement benefits to earn more before having money withheld from their checks.
5. The full retirement age for those born in 1959 has increased to 66 and 10 months, reaching 67 next year for those born in 1960 and later.
It’s essential to understand these changes to ensure you’re taking advantage of the benefits and avoiding any potential shortfalls. As with previous years’ changes, these adjustments will be made again in 2026 and beyond.
Source: https://www.fool.com/retirement/2025/01/01/5-2025-social-security-rules-that-take-effect-toda