The Social Security Administration (SSA) warns of new changes every year that affect a lot of people in the United States. The changes are meant to protect those who benefit, boost production, and sometimes deal with problems that might come up in the future.
A lot of people look forward to October because they love Halloween and all things fall. But there’s another good thing about October coming up soon. The Social Security Administration will talk about some big changes to the program on October 10.
These changes could affect you even if you don’t get payments right now. On that day, we should get these three important reports.
Social Security changes that will affect retirees as of January 2025
The earnings test threshold will rise for Social Security beneficiaries next year
In addition to getting Social Security every month, seniors will also be able to work and make extra money. When you hit full retirement age, making any amount of money won’t change how much you get each month.
There is, however, a cap on how much you can earn before you stop working and start getting Social Security benefits. If you go over this limit, your benefits will generally be cut in half.
The good news is that your benefits will be returned to you when you hit full retirement age. But before that happens, it’s important to know how much money you can make.
The most that people who haven’t reached full retirement age yet but hope to do so before the end of 2024 can earn before they have to meet the earnings test is $59,520, which is $22,320. It’s important to know your exact cap, but keep in mind that these numbers will likely go up with inflation in 2025.
Social Security’s earnings limit will increase to account for inflation
Social Security is paid for by taxes on workers’ wages. But workers don’t have to pay these taxes on every dollar they make. Every year, a pay cap is put in place for Social Security taxes. Wages above the cap are not taxed by Social Security. The most you can earn in 2019 is $168,600.
However, this number and the earnings test cap are both set to rise in 2025 to account for inflation and wage growth. So, people who make more money should be ready to lose a bigger chunk of their income.
If you think you belong to this group, you might want to talk to a tax expert about ways to lower your general tax bill to the IRS. Millions of Americans of all ages could be affected by these big changes to Social Security. If that sounds like you, make sure you check out the SSA website on October 10 for official word.
The cost of living adjustment (COLA) for 2025 will be lower than expected
There has been doubt about next year’s Social Security COLA for months now. The nonpartisan Senior Citizens League‘s most recent prediction is that the COLA will be 2.5% in 2025, based on current figures of inflation.
However, that amount might go up or down based on what September inflation does. Of course, getting a COLA from the SSA isn’t the only thing that matters.
If you get Social Security, you won’t know how much more money you can expect in your monthly checks until Medicare releases its standard Part B cost for 2025.
This is because Part B premiums are taken out of the Social Security payments of seniors who are enrolled in both plans at the same time. So, even if you get a raise because of a future cost of living adjustment (COLA), the upcoming Medicare cost increase may unfortunately wipe it out.
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