IT'S COMING: Major Changes to Social Security SSI SSDI by 2025

welcome back to financial Futures today we're tackling one of the most important Financial issues facing millions of American Social Security changes coming in 2025 regardless of who sits in the White House these changes will impact retirees future retirees and even those currently working so whether you're in your 20 or your 60 this affects you we're going to break down the five biggest changes coming up explain explain how they'll impact your benefits and help you plan ahead so you can stay one step ahead of the curve before we dive into the details do me a favor hit that like button if you find this content valuable and if you're new here make sure to subscribe to financial Futures so you never miss out on key updates that can affect your financial future let's get started first on the list is the cost of living adjustment also known as Cola every year Social Security benefits are adjusted to keep up with inflation now you may have heard about the big increases in 2022 and 2023 which were over 5% and even close to 9% due to high inflation rates but here's the catch in 2025 the cola is expected to shrink based on current projections we could be looking at a cola increase as small as 2.6% why because inflation has been cooling down as the Federal Reserve Works to stabilize prices this means while your social security check will still increase the bump will be significantly smaller than what we've seen recently for some that's a relief but for others especially those struggling with Health Care and housing costs this smaller increase could be a concern so it's more important than ever to budget wisely and factor in a more modest raise in your future Social Security benefits let's talk about work credits in case you're not familiar you need to accumulate 40 work credits during your career to qualify for social security benefits you earn these credits by working and paying Social Security taxes but here's where it gets tricky starting in 2025 it's going to get a little tougher right now to earn one work credit you need to make at at least $1,640 in wages in 2025 that number is expected to rise to $7 $30 or even higher if you're a high earner this change won't make much of a difference to you but for those of you working part-time seasonal jobs or just trying to make ends meet this can delay your progress toward earning those crucial 40 credits it's especially important for people who are late in their careers gig workers or those returning to work after an extended break to be aware of this start planning now to make sure you hit those earnings targets for those of you thinking about early retirement this next change might be interesting if you decide to start collecting Social Security before your full retirement age there's a limit to how much you can earn from a job without having your benefits reduced in 2024 the earnings limit is set at 22 $2,320 but in 2025 that limit is expected to rise though only slightly we're looking at somewhere around $23,000 to $24,000 this means if you're retired early but still working part-time you'll have a little more breathing room before the government starts reducing your monthly social security check for every $2 you earn above the limit Social Security deducts $1 from your benefits until you hit your full retirement age once you reach full retirement age you can earn as much as you want without any reduction in benefits so if you're planning on early retirement make sure to factor this into your financial strategy to avoid surprises now let's talk about the full retirement age F this is the age when you can claim your full Social Security benefits without any reductions as part of reforms that started back in the 1,900 ads the full retirement age has been gradually increasing for anyone born in 1960 or later the full retirement age will soon be 67 years old however for people turning 66 in 2025 the full retirement age will be 66 years and 10 months that's just two months shy of 67 but those two months can make a difference in how much you receive ceed if you retire early while this shift may seem small it's crucial to understand how even a few months can impact your benefits so if you're planning your retirement make sure you're targeting the right age to avoid any unnecessary penalties finally let's talk about taxes specifically the Social Security tax cap currently if you earn more than $168,000 a year only the first $168,000 of your earnings are subject to Social Security taxes in 2025 this cap is expected to rise to at least $174,000 or higher what does this mean for you if you're a high earner more of your income will be subject to that 6.2% Social Security tax meaning you'll be contributing more to the system but don't worry it won't affect your benefits if you're already retired or if your income is below this threshold however this change will help bolster the Social Security trust fund which has been under strain in recent years and there you have it five major changes to Social Security that you need to know about before 2025 whether you're already collecting benefits planning your retirement or still in the workforce it's vital to stay informed about how these changes will impact your financial future at Financial Futures we're committed to helping you navigate the complex world of personal Finance so make sure to subscribe and hit that notification Bell to stay updated on the latest developments and if you have any questions or thoughts about these Social Security changes drop them in the comments below I'd love to hear from you thanks for watching and until next time keep planning for your financial future