Social Security benefits play a crucial role as the main source of income for millions of Americans. These benefits are essential for retirees, survivors, and people with disabilities.
As we approach 2025, there are some important changes that Social Security recipients need to know about.
These updates from the Social Security Administration (SSA) will impact the amount of money many Americans will receive in their monthly payments.
Let’s take a closer look at these changes and how they will affect Social Security beneficiaries next year.
1. Social Security Benefits Will Increase in 2025
Each year, Social Security benefits are adjusted through a system called the cost-of-living adjustment (COLA).
This increase helps ensure that payments keep up with inflation and the rising costs of goods and services.
The Bureau of Labor Statistics has announced a COLA increase of 2.5% for 2025. This means that all Social Security recipients will see their payments rise by this percentage.
For those who receive Supplemental Security Income (SSI), the first increase will appear in December 2024.
Other beneficiaries will see the adjustment in January 2025. For example, someone receiving $1,870 a month from Social Security could expect their monthly payment to increase by about $46.80 due to the 2.5% increase.
While this is a good change, it’s worth noting that this will be the smallest COLA adjustment since 2021, and the rising costs of everyday expenses, such as housing, groceries, and insurance, may still make it feel like not enough.
2. The New Taxable Earnings Threshold in 2025
Social Security is funded through federal taxes that American workers pay, with businesses matching the 6.2% contribution.
Every year, the SSA adjusts the cap on how much income is taxable for Social Security purposes. In 2024, the maximum taxable earnings were $168,000. In 2025, this limit will rise to $176,100.
This means that workers earning more than $176,100 will not pay Social Security taxes on their earnings above that amount.
3. A Bill Could Significantly Change Social Security Benefits
There’s a new bill making its way through the U.S. House of Representatives that could change how Social Security benefits work.
The bill is called the Social Security Fairness Act, and it could remove two major provisions that currently impact Social Security payments for certain workers: the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).
The WEP affects people who work in public sector jobs (like government jobs) where they do not pay Social Security taxes.
If these workers also qualify for Social Security benefits from other jobs where they did contribute to Social Security, their benefits are reduced. This rule affects over 2 million people in the U.S.
The GPO reduces Social Security spousal or survivor benefits for retirees who didn’t pay into Social Security during their government careers. Around 800,000 retirees are impacted by this rule.
The bill has received support in the House of Representatives, and Democratic Senate leader Chuck Schumer is pushing for it to move forward. However, it is unclear if the bill will pass in the Senate.
4. Changes to SSA Customer Service
The Social Security Administration has made some improvements in its customer service over the past year, but there could be setbacks in 2025 if additional funding is not approved.
In September 2024, Congress rejected a proposal to increase SSA funding, which led to the agency imposing a hiring freeze.
This freeze means that the SSA may not be able to hire enough staff to handle the increasing demand for services.
If Congress does not approve more funds for the SSA, it could result in delays and less effective customer support.
The Biden administration requested additional funding to ensure the agency’s operations continue smoothly, but this request was rejected by Republicans in the House of Representatives.
If funding issues are not resolved by March 2025, the SSA could struggle to provide timely help to those who need it.
Who Will Be Affected by These Changes?
These changes will affect a wide range of Social Security recipients, from retirees to those receiving disability benefits. Some of the most important groups that will be impacted include:
- Retired Workers: The COLA increase will provide a boost to monthly payments, though it may not fully offset the rising costs of living.
- Disabled Workers: Those who receive Social Security Disability Insurance (SSDI) benefits will also see a similar increase in their payments.
- Survivors: People who receive benefits from a deceased spouse will see their monthly amount increase with the COLA adjustment.
- Government Employees: Workers in public sector jobs who are impacted by the WEP and GPO provisions could see changes to how their benefits are calculated if the Social Security Fairness Act is passed.
- SSI Recipients: People receiving Supplemental Security Income will also see a similar COLA increase, starting in December 2024.
Conclusion
The changes coming to Social Security benefits in 2025 will impact millions of people in the U.S. While the COLA increase offers some relief, it may not be enough to fully match the increasing costs of living.
The possible changes to the WEP and GPO rules could provide important benefits for government workers who have been impacted by these reductions.
However, the funding challenges at the SSA could create delays in customer service, which might cause issues for those needing assistance.
All Social Security recipients need to stay informed about these changes and how they may affect their payments in the coming year.
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Archer Bannister is a journalist with 4 years of experience covering hard-hitting stories. Currently working with Mikeandjonpodcast, Archer specializes in delivering timely and in-depth updates on a variety of topics, including crime news, politics, and national issues affecting the USA. His expertise and dedication to delivering accurate, impactful news make him a trusted voice for audiences seeking to stay informed on critical topics.
