What to Expect for Social Security in 2025
If you receive Social Security benefits, you’re probably aware that your payments are adjusted each year to keep up with inflation. But did you know that there are several other annual changes to the Social Security system that can affect both current and future retirees? Let’s take a closer look at what adjustments are in store for 2025.
Cost-of-Living Adjustment (COLA)
One of the most well-known changes to Social Security each year is the Cost-of-Living Adjustment (COLA). This adjustment is made to ensure that beneficiaries receive a payment that keeps pace with inflation. For 2025, the COLA is expected to be around 2.5%, providing recipients with a slight increase in their monthly benefits.
Full Retirement Age (FRA)
For individuals who have not yet reached retirement age, the Full Retirement Age (FRA) is an important factor to consider. In 2025, the FRA will increase by two months, bringing it to 66 years and 8 months for those born in 1957. This means that individuals will need to wait a bit longer to receive their full Social Security benefits.
Maximum Earnings Subject to Payroll Tax
There is also a change in the maximum amount of earnings that are subject to payroll tax for Social Security. In 2025, this amount will increase to $147,000, up from the previous limit of $142,800. This means that individuals will pay Social Security taxes on their earnings up to this new threshold.
Overall, these annual adjustments to the Social Security system are designed to ensure that retirees receive the benefits they are entitled to while keeping the program financially stable. By staying informed about these changes, you can better prepare for your retirement and make the most of your Social Security benefits.