5 Social Security Changes Coming in 2025, No Matter Who Wins the Elections

5 Social Security Changes Coming in 2025: As we look forward to the elections that are scheduled for November, a lot of focus is on the presidential candidates and what they would do to Social Security if they occupied the White House. Nevertheless, it doesn’t matter whether the Republicans hold the White House and Congress or not—something is going to happen to Social Security in 2025.

Here are five points of the program that will be influenced irrespective of who governs:

The size of retirees’ checks

First of all, it will change the situation of today’s pensioners, and this is the first rather large change. Those who are still eligible for social security will be glad to know that their checks will be larger next year. This is because the benefits program has incorporated provisions for automatic cost of living adjustments with a view to cushioning the effects of buying power shrinkage.

Consequently, as prices increase, so do the benefits. A formula examines the variation of a consumer price index to decide how large the COLA will be. This means that seniors can still expect a 2.6% increase, although they won’t be certain as the formula utilizes the data from the third quarter. Seniors will come to know it in October.

Also Read: IRS Tax Credit Schedule for September 2024

The amount you must earn to qualify for a work credit

Social Security is an “entitlement program,” or, as it is more accurately described, an “earned benefits program.” By the way, as for age, in order to get benefits, you need to accumulate 40 work credits and you can earn up to 4 credits per year. The work credits can be earned and acquired from the income earned and the tax paid on such income. The wages that have been set for a single work credit to be earned in 2024 are $1,730. That way, if you earn $6,920 this year, you will be able to claim the four credits you are allowed.

The number of dollars that one has to earn to secure a work credit rises every year to factor in wage inflation. For instance, you can earn a work credit in the year 2023 by earning only $1,640.

However, for those who are in a working status with a small income, it is wise to look at this adjustment that is expected to be implemented early next year. It would be unbecoming to be occupied with so many work credits that by the time one qualifies for retirement benefits, one has little or none.

How much money you can make without affecting your Social Security benefit

If a person is 66 or older, he or she can work as much as possible without receiving any reduction in benefits. That’s not changing.

But if you are taking benefits before you reach your full retirement age, then that is not true. Depending on your level of income, you begin to lose some of your Social Security benefits once you reach a particular level of earnings. However, you get it back in the future when your benefits are adjusted at full retirement age; however, your SS checks could disappear if your wages are high.

The threshold below which this happens is variable and for the year 2025 (to be updated upwards, probably because it is adjusted for inflation). This is healthy news. The idea is that people can receive more in their paychecks, but still have the opportunity to get the benefits.

As for the wage limit, it is still $22,320 in 2024. The limit for making in 2025 has not been declared.

Also Read: $115,000 Grants Available for Everyone! Get $4,250 Free Cash Instantly

How old you must be to claim your benefit without any penalties

Another pretty major change that retirees will experience in 2025 is built in.

As to the point that they can begin to claim full benefits, that is shifting to a later age. For those born in 1954, the proposed change would allow people who will be 66 in 2024 to collect their full, un-reduced benefits at 66 and 8 months, but everyone else cannot receive their benefits until 66 and 10 months. If not, then they will be subjected to penalties, which are for individuals who begin claiming benefits before their full retirement age on a monthly basis.

The process to change this element started back in 1983, when Congress decided to pass the legislation that calls for making the full retirement age gradually rise later on in a bid to help stabilize the deteriorating social security system funds.

The amount of income subject to Social Security tax

This is one of the changes that the high-earners would not be very pleased to see. A higher maximum income will be taxed for Social Security in the year 2025.

Social Security limits how much-taxed income is credited for when determining the amount of benefits that will be received. The cap is $168,600 in 2024; however, the cap is subject to being raised due to inflation; therefore, it will increase in the following year. Once again, this limit is to be raised, so if you earn more than $168,600 in the year 2025, you’ll have to pay more in Social Security tax in the year following.

These changes occur due to provisions made for inflation on Social Security and due to legislation made ages ago. As it was mentioned earlier, it is better to begin modifications regarding senior citizens and future retirees, no matter who wins this election from now on.

FAQs