As the new year approaches, Social Security users should consider the SSA’s upcoming reforms and how they may impact their lives and benefits.
Because benefits are such an important aspect of the lives of over 70 million people across the country, knowing how the changes will affect them ahead of time can save a lot of hassle in the long run.
Calculate your new Social Security check amount after the new COLA
Every year, all benefits receive a cost-of-living increase.In 2025, all Social Security benefits, including retirement, will get a 2.5% rise.
To calculate your new benefit for 2025, simply apply the 2.5% COLA to your most recent payment and add the result to your current benefit. The average retirement benefit will increase by $47 per month.
Make sure you are aware of the 2025 benefits calendar
SSI benefits will continue to be distributed on the first of each month, with the exception of the first payment on December 31, 2024 due to the weekend and national holiday rule. The rest of the benefits will follow the same staggered calendar.
Recipients with birthdays on the 1st-10th of the month will receive their benefits on the second Wednesday of each month, those born on the 11th-20th will receive payouts on the third Wednesday, and those born on the 21st-31st will receive payments on the fourth Wednesday. The National Holiday date change continues to apply to these benefits.
Double-Check Your Full Retirement Age
If retiring in 2025, confirm your exact retirement age, as most people fall between 66 and 67 years old. If you were born before 1959, you are safe. If you were born in that year, your full retirement age is 66 and 10 months.
If you were born in 1960 or later, your full retirement age is 67. You still have a year to get full benefits.
Determine Your Income Tax Obligation
Before the end of 2024, assess your prospective federal income taxes on Social Security benefits, especially if you have additional sources of income. Approximately 40% of Social Security beneficiaries must pay federal taxes on their benefits, primarily due to “provisional income” from sources such as earnings, interest, investment returns, and dividends.
Social Security taxes are based on provisional income, which is the sum of Adjusted Gross Income (AGI), Nontaxable Interest, and half of Social Security benefits. The amounts differ between single filers and married people filing jointly:
Single Filers:
- Provisional income less than $25,000: No taxes on benefits.
- $25,000–$34,000: Up to 50% of benefits taxable.
- Over $34,000: Up to 85% of benefits taxable.
Married Filing Jointly:
- Provisional income less than $32,000: No taxes on benefits.
- $32,000–$44,000: Up to 50% of benefits taxable.
- Over $44,000: Up to 85% of benefits taxable.
Working while receiving Social Security benefits may result in reduced payouts before reaching full retirement age due to the earnings test. If you are under full retirement age for the whole year, the SSA will deduct $1 for every $2 earned above the annual maximum. In 2024, the cap is $22,320, which will rise to $23,400 by 2025. If you reach full retirement age in 2025, the SSA deducts $1 for every $3 earned beyond a higher limit. Earnings are only counted before the month of full retirement age. For 2025, the higher maximum is $62,160 (up from $59,520 in 2024).