Social Security is not immune to change. Rules, eligibility requirements, payments, and more are subject to updates. Two major changes are expected to take effect in 2025, affecting both current and incoming recipients.
Firstly, monthly benefits will increase by 2.5% due to the cost-of-living adjustment (COLA). This annual adjustment aims to offset inflation’s impact on goods and services. While this may seem modest compared to previous years’ increases, it still provides a boost to recipients’ monthly benefits.
However, not all income is subject to Social Security taxes in 2025. The wage base limit has increased to $176,100, up from $168,600 in 2024. This means more workers will be subject to payroll taxes if they earn above this limit. For example, an individual earning $175,000 in 2025 will see all of their income subject to taxes.
Knowing the wage base limit is crucial for those aiming to receive the maximum monthly benefit. To qualify for the highest payment, recipients must delay claiming until age 70 and have earned above the new wage base limit over the 35-year calculation period.
While these changes may not directly impact current recipients, staying informed about annual updates can provide insight into the program’s health and direction.
Source: https://www.fool.com/retirement/2024/12/15/here-are-two-major-social-security-changes-retiree