Social Security Adjustments for 2025: What You Need to Know
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Starting in January 2025, Social Security recipients will see a 2.5% cost-of-living adjustment (COLA) in their monthly benefit payments. This increase translates to an average boost of over $50 per month for retirees, according to Social Security officials. For example, the AARP estimates that retirees currently receiving around $1,920 a month will see their payments rise by about $48.
The Social Security program is funded by payroll taxes collected from workers and employers. In 2024, the maximum income subject to these payroll taxes was $168,600, up from $160,200 in 2023. Analysts predict that this cap will increase to $174,900 in 2025, ensuring continued support for the Social Security trust fund.
An Extra Check in November 2024: Here’s Why
Some Social Security recipients will receive an additional check in November 2024 due to a scheduling quirk. Generally, Supplemental Security Income (SSI) payments are issued on the first of each month. When the first falls on a weekend or holiday, however, checks are sent out on the previous weekday.
Since December 1, 2024, lands on a Sunday, December checks will be sent out on November 29. Similarly, for January 2025, payments will be issued on December 31, 2024, with checks for February and March arriving on January 31 and February 28, respectively. This means no SSI payments will be sent in March 2025, but payments will resume their regular schedule in April. Staying aware of these schedule changes can help recipients plan ahead.
Adjustments to Work Credit Requirements for 2025
In addition to the COLA increase, there’s another notable adjustment for those earning work credits toward Social Security benefits. In 2025, the earnings threshold needed to earn one work credit will rise from $1,730 to $1,810. Workers can earn up to four credits each year, and this adjustment reflects inflation and average wage growth.
For full-time workers, meeting this requirement likely won’t pose an issue. However, part-time workers who may struggle to reach the necessary earnings should pay careful attention to their income in 2025 to ensure they accumulate enough credits. It’s essential to remember that these credits establish eligibility for benefits, but they don’t influence the amount you ultimately receive.
To qualify for Social Security benefits, you’ll generally need to secure at least four credits annually for the 10 years before retirement. Therefore, monitoring your earnings over the years, particularly if you work part-time or have variable income, can help you stay on track.
Planning Beyond Social Security
For many retirees, Social Security is a vital part of their income, but it’s best used as just one piece of a broader financial plan. Additional savings, investments, and alternative revenue streams can help ensure a secure and comfortable retirement. By diversifying your sources of income, you’re better positioned to handle any unexpected expenses or market changes and to enjoy greater financial stability.
Staying informed about these Social Security adjustments is essential for maximizing your benefits and preparing for a successful retirement. Taking the time now to understand these updates, review your work credits, and plan beyond Social Security can help ensure your financial security well into the future.
