The Social Security Administration (SSA) is getting ready to release the cost-of-living adjustment (COLA) for 2025 this week, which is a big deal for seniors.
The SSA is finally ready to make the announcement, but it took longer than expected for a good reason: the administration needs the final inflation numbers from September to figure out the change. This information won’t be available until October 10, so retirees will have to wait a little longer to find out how much their raise will be for the next year.
But October 10 isn’t just about the COLA. The SSA will also share other important information for 2025, such as changes that will affect retirees who are still working and workers who pay into Social Security.
The earnings-test limits and the wage cap for Social Security taxes are two places that retirees and people who are close to retiring should pay close attention to.
Earnings-Test Limits for 2025
One good thing about Social Security is that people who get benefits can work and make money while they are getting benefits. But you can only make so much before you hit full retirement age. If you earn more, your Social Security payments will go down. If you are still getting benefits even though you are not fully retired yet, some of them may be taken away if your earnings go over a certain level.
This wage-test cap is set at $22,320 for 2024. This means that some of your benefits may be taken away if you earn more than this amount before you hit full retirement age. The earnings test cap is higher for people who will be full retirement age in 2024, at $59,520. These limits are likely to go up in 2025, letting retirees make a little more money without having their benefits go down.
It’s important to remember, though, that any benefits that were denied because the person made too much money are not lost forever. When you hit full retirement age, the SSA gives these amounts back to you. If you are counting on those perks in the short term, this may not be good news. It may be good news for your long-term finances.
The 2025 Social Security Wage Cap
Another important thing that will be changed in 2025 is the pay cap, which affects both workers and the Social Security system as a whole. Not all of a worker’s pay is taxed by Social Security. Instead, there is a pay cap that controls how much of a person’s income is taxed by Social Security. The wage cap for 2024 is set at $168,600. This means that any income over this amount is not taxed for Social Security reasons.
Because of inflation and wage growth, this wage cap is expected to go up in 2025. It may seem like this is a small thing that only workers care about and not retirees, but it is very important for the long-term security of Social Security.
The program might not have enough money coming in over the next ten years, which could mean fewer benefits if more money isn’t found. When the pay cap is raised, more income is taxed, which brings more money into the system. This is one piece of the puzzle that will help make sure that Social Security will be around in the future and may keep payments from being cut in the future.
Even though the COLA release is getting a lot of attention, you should still keep an eye on these other news from the SSA. The pay cap and earnings-test limits are two important factors that can change how much retirees can earn without being penalized and how much money goes into Social Security as a whole.
Because these changes are so important, you should check the SSA website on October 10 to find out how they will affect you. What changes are happening with Social Security? This is important to know whether you are retired or still working to make sure you have enough money in the future.
Also See:- Bad News for Millions of Americans – Problems with Social Security and Medicare Payments