Social Security Announces 2 More New Changes After The COLA – Everything is Going to Change for Retirees

Social Security announces 2 more new changes in their monthly payments distributed to help their citizens who belong to low-income families. SSA releases the cost of living adjustments for 2025 to keep pace with inflation rates. These new changes might create a positive and negative impact on the financial condition of the citizens.

However, there is an apparent delay in their final announcement due to incomplete data from the authorities. Citizens will need to meet the authority’s requirement to know about the complete updates and have information about the changes decided by the department.

Social Security Changes

Many citizens are struggling to manage their monthly finances and still haven’t recovered from the previous pandemic loss. The Social Security Administration has worked to help citizens with their payment programs, which provide financial support to their citizens.

Due to a new increase in COLA Adjustments, Social Security announces 2 more changes in their payments to help the citizens. However, there is a possibility that this upcoming increase will be less since 2021, affecting the lifestyle of suffering citizens.

COLA Increase and New Changes to Social Security

On 10th October, it was decided that SSA would release the COLA increase for the next year on this day. Besides the COLA increase, the Social Security Administration will release many other changes issued next year.

As we know, the Social Security announces 2 more new changes in their monthly payments, which can lead to a slight increase in payment amount. It will affect the retired workers and workers paying social security taxes.

As per the updates, the authorities have increased the taxes that the working employees and earnings limit need to pay.

Earning Test Limits for 2025

Social Security enables beneficiaries to earn and work money while receiving the benefits, except based on some limits related to earnings up to the full retirement age.

• In 2024, the earnings-test limit applies for people whose retirement is before the full retirement age at $22,320. That means there might be benefit withholdings if such earnings exceed this amount.
• For people reaching full retirement age in 2024, the limit is higher at $59,520. These will be higher in 2025, and retirees will have more income without penalty from the loss of benefits.
• Benefits withheld for crossing earnings limits are recovered permanently. When a worker reaches full retirement age, the SSA returns the amount withheld from the benefit.

However, this might pose problems for those who need to use the benefits for current expenses since the amount withheld will only come back later.

Social Security Wage Cap for 2025

Wage Cap Update:

• The wage cap is the wage limit for a worker’s earnings, subject to Social Security taxation.
• 2024 – $168,600. All amounts above this will not be taxed for Social Security.

2025 Update:

• Consequently, it will be expected that the wage cap will be increased in 2025, as has been proven by past inflation and wage growth trends.

Impact on Workers and Retirees:

• Though it directly affects workers, the wage cap also has implications for retirees since it involves the general stability of the Social Security system.

Revenues and Stability:

• Social Security is at risk of a revenue shortfall in the following decade. This is likely to discontinue benefits without new money being supplemented.
• Increased wage caps subject more income to taxation and thus raise the intake of funds into the Social Security system.

Long-term Sustainability:

• One way changes in the cap may be applied to adjust the long-term sustainability of Social Security is through changes in the cap.
• This may help avoid unnecessary cuts to benefits so benefits do not go to zero in the future and keep the program afloat for the long haul.

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