The new year will bring changes to Social Security that will impact some individuals more than others. One significant change is an increase in FICA taxes for higher earners, which will see the maximum taxable earnings rise from $168,600 to $176,100 next year.
For those who receive Social Security retirement benefits before their full retirement age (FRA), there’s another potential negative impact. The limit on how much earnings can be subject to FICA tax without penalty will increase from $22,320 to $23,400 and then again from $59,520 to $62,160 in 2025.
On the positive side, all Social Security beneficiaries will receive a 2.5% cost-of-living adjustment (COLA) beginning January 1st, which aims to protect benefits from inflation. However, this increase might not keep pace with rising medical costs for seniors. In fact, medical expenses rose faster than overall inflation in the latest November report.
While a lower COLA is good news in terms of inflation control, it may not be enough to ease the burden on retirees struggling with increased healthcare costs. As such, these Social Security changes in 2025 are expected to have varying impacts on different individuals and households.
Source: https://finance.yahoo.com/news/heres-1-social-security-change-094500588.html