Nearly 68 million Americans will receive a Social Security check in 2024, and for many people, those checks will make or break their finances.
It's a good idea, then, to make sure you're staying up to date with the program's latest changes. While Social Security may not change significantly from year to year, there are some adjustments that will affect your monthly payment.
On Oct. 10, the Social Security Administration (SSA) is planning to make some major announcements for 2025. Here's what you can expect.
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1. The COLA for 2025 will be announced
The cost-of-living adjustment (COLA) is a way to help benefits maintain their buying power over time. Beneficiaries will receive monthly checks for the rest of their lives, and the COLA aims to ensure that those payments can keep up with rising costs.
In 2024, the COLA was 3.2% -- meaning beneficiaries received an extra 3.2% of their benefit amount starting in January of this year. On Oct. 10, the SSA will announce the adjustment for next year, which will take effect in January 2025.
It's likely that the 2025 COLA will be smaller than this year's adjustment, as inflation has cooled slightly over the past year. Nonprofit group The Senior Citizens League has predicted that it will land at 2.5%, based on this year's inflation data from the Bureau of Labor Statistics, but we won't know the exact figure until the SSA makes the official announcement.
2. Medicare premiums will affect your benefit amount
Before you get too excited over the COLA for next year, keep in mind that Medicare costs will also be changing. Because Medicare Part B premiums are generally deducted from Social Security payments, higher premiums could eat away at your benefits even if we get a higher-than-expected COLA.
In 2024, the standard Medicare Part B premium is $174.70 per month for individuals earning $103,000 per year or less (or $206,000 per year or less for married couples filing jointly). In 2023, the standard Part B premium was $164.90 per month, a difference of $9.80 per month.
For some people, even slightly higher premiums can have a significant effect on their benefits. If you're collecting, say, $2,000 per month from Social Security, a 2.5% COLA would give you an extra $50 per month. Even if Medicare premiums only rise by around $10 per month, that's still a hefty bite out of your COLA raise.
3. The earnings test limit will likely increase
If you're working while on Social Security, you could be subject to the retirement earnings test -- an income limit that will determine whether your benefits are withheld due to your wages.
There are two limits, depending on whether you will or will not reach your full retirement age this year. If you're under your full retirement age, your benefits will be reduced by $1 for every $2 you earn over $22,320 per year. If you're reaching full retirement age this year, your reduction is $1 for every $3 over the limit of $59,520 per year.
| Income Limits: 2023 | Income Limits: 2024 | Benefit Reductions |
|---|
| If you're under full retirement age | $21,240 per year | $22,320 per year | $1 for every $2 over the limit |
| If you'll reach full retirement age this year | $56,520 per year | $59,520 per year | $1 for every $3 over the limit |
Data source: Social Security Administration. Table by author.
These caps generally increase each year to account for changes in inflation, so you can likely expect higher limits coming in 2025. This can be a good thing for those still working, as it means you can earn more before facing benefit reductions.
This month is a big one for Social Security, and you can expect some major changes on the horizon for 2025. By staying updated on the upcoming announcements, you can head into the next year as prepared as possible.
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