Fasten your seatbelts, there are curves, or rather changes, coming for 2025. The Social Security Administration (SSA) has already announced the moves it will make for this year, both for retirees and for those who receive disability payments. And there are curves coming because the Administration needs to face the economic challenges that come in the future.
COLA Adjustment
The COLA is the Cost of Living Adjustment, an extra that Social Security adds to all payments it makes to compensate for the effect of inflation on the beneficiaries’ pockets. In this way, it compares the prices of the third quarter of the previous year with current prices and establishes a margin of loss of money, which it then adds to its payments so that beneficiaries do not lose purchasing power and can continue living peacefully without noticing the rise in prices.
For you, this means that if you receive SSA benefits, you will see a small increase in your monthly check. For this year, it will be 2.5% (that is, they will add that small percentage to your base SSA salary). It is not a large number, but it means that we are slowly getting closer to economic stability and that we are finally getting out of the process of inflation. And no, when we reach economic stability, they will not take anything from your salary, they will only give you the base salary and that’s it, as it was before the country was plunged into this wave of inflation.
Changes in retirement age
Unfortunately, yes, the full retirement age will no longer be 66 but 67 (for those born after 1960), and it could even be extended to 70 if the individual wants to add an 8% more benefit to their retirement payment, or to 62 but you would see the money you should receive reduced by up to 30%. This change is mainly due to the fact that the quality of life is now much better and life expectancy, therefore, increases, so it would be unfeasible to continue retiring at 65 (because there would be more retirees than there would be money to distribute)
What do you need to know if you want to retire?
- If you retire early, the amount of your benefits will be reduced
- If you retire later, the amount of your benefits will increase
Consult a specialized financial advisor to choose the plan that best suits your case, since not everyone can work until they are 70 years old.
There will be changes to contributions
Taxable income will also get an adjustment. In 2024, the limit was $160,200 a year, but by 2025, it will go up to $176,100, meaning those who earn more will also contribute more to the system.
Does this affect you? If your income exceeds this limit, you will pay taxes on a larger portion of your earnings!
What if I want to apply for my benefits?
You will need these three documents correctly:
- Proof of citizenship: (a birth certificate or passport)
- Verification of age (birth certificate or medical records)
- Valid ID (driver’s license or updated state card)
How will these changes affect you?
Although the main rules of the program do not change, these adjustments could affect your payments and requirements. It is important to stay informed to avoid surprises, so you can visit the SSA portal to receive updates and personalized advice, so that the new developments that the SSA imposes do not catch you by surprise. And even though it may seem like a long way off now, Social Security will also be a part of you in a few years. The future is coming very soon and it is better to be prepared to be able to take full advantage of the benefits of SSA. Let retirement really be our ultimate stage of relaxation!