2025 Social Security Projections: 3 Things to Know [COLA]

Published: Sep 08, 2024 Duration: 00:02:50 Category: Education
Tags : social security
Trending searches: 2025 social security cola increase
- Of course, you already know that every year, changes are made to Social Security. We're going to go over three projected changes that will affect Social Security for 2025. The projected changes will affect full retirement age, the Social Security COLA, and Social Security credits and taxes. A lot of us don't realize that retirees are not the only taxpayers affected by Social Security. Even if you're still working, each year, you should check to see what changes affect social security. First, you don't pay Social Security taxes on all your wages. If you're still working and you earn more than $168,600 in 2024, once you reach this amount in wages, you won't have any additional Social Security taxes taken out of your paycheck. For 2025, the maximum amount taxed is projected to go up to $174,900. So this means that if your income is at this level, you will be paying Social Security taxes on more of your income. For instance, if the Social Security wage cap goes up to $174,900, you will have $10,843.80 deducted out your paycheck in 2025 for Social Security taxes, compare that to the maximum deduction of $10,453.20 for 2024. The interesting thing is the Social Security wage cap was only $137,700 in 2020. As you can see, the maximum wage limit has been jumping up every year. The second change to Social Security in 2025 is the full retirement age. The age to reach full retirement will inch a little bit higher. In 2025, you must be 66 years and ten months to get full retirement. For 2024, it was 66 years and eight months. You can still retire as early as age 62, it's just your Social Security income will be lower than if you were to wait until full retirement age. And lastly, we have the cost-of-living adjustment, or COLA. If you're retired or on disability, it has been projected that your cost-of-living adjustment will be lower than what you received for 2024. Since inflation is not as bad as it was last year, the increase should be smaller. The COLA for 2024 was 3.2%, but the projected increase for 2025 is only 2.6%. If you take a look at the screen, you can see how the actual dollar increase might look. As usual, you will get your COLA increase letter in the mail this December. Again, all of these numbers are projected numbers. The actual numbers will come out in October. Usually, the projected numbers aren't too far off from actual. Are you surprised or disappointed by the numbers at all? Let us know in the comments section. Also, now that you know about the changes coming for Social Security, you may want to know about tax updates that will affect your 2024 tax return that you will file in 2025. Please watch the video in the top left of your screen to get that information. All the best to you.

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