Social Security is, perhaps, the most debated topic in U.S. politics. If a substantial change is not made to the program, the Social Security Administration will have to cut some benefits for millions of retirees. Want to know what the consequences are?
With less than two months to go before the end of 2024, it is unlikely that Congress can make significant changes to the program. However, that does not mean that all Americans should not know the changes incorporated into the program that could end up having a big impact on their economic planning for 2025.
Retirees, as well as workers, need to know each of the changes expected for the coming year. Because if you’re not ready for the new updates, January 1st will catch you by surprise. We show you the most important changes that will be made to Social Security.
3 important changes in Social Security
1. Beneficiaries will receive an increase: Adjusts retirement benefits according to inflation through the implementation of a cost-of-living adjustment (COLA). For 2025, the COLA is 2.5%, which means that most beneficiaries could get a small increase in their monthly checks.
2. Some workers will have to pay more Social Security taxes: If you earn a high income, you probably don’t have to pay taxes on all of your income. In 2024, any salary earned above $168,600 is not subject to the tax. For 2025, that amount will increase to $176,100. This means that anyone who earns more than $176,100 in both 2024 and 2025 will have an additional $465 deducted from their salary next year.
3. Earning more while receiving Social Security benefits: If you are working while receiving early Social Security benefits, you may be subject to the earnings test. The test applies to anyone who has not yet reached full retirement age. It works like this: if you earn more than a certain income threshold during the year while receiving benefits before reaching full retirement age, the Administration will begin to reduce the amount you receive each month. The reduction amount is $1 for every $2 earned above the threshold.
For 2024, the earnings threshold is $22,320. Next year, beneficiaries can earn up to $23,400 or $62,160, respectively, without this affecting their Social Security check.