The Social Security Administration system will undergo changes in 2025, and all people who rely on SSA programs (such as retirees and Supplemental Security Income beneficiaries) will be affected by these changes, which will do everything possible to keep the current system adaptable and stable in line with the current economy.
Here, we’ll tell you everything you need to know to avoid falling behind and to learn about all of the changes that will be implemented so you can plan your payments accordingly. Let’s go!
The COLA and its decrease
This year, we will see how the COLA decreases to 2.5%, even though it is added to your Social Security payment.
And this adjustment (Cost of Living Adjustment) is simply a percentage added by the Administration to ensure that our pockets do not feel the effects of inflation and that we maintain the same purchasing power despite this.
So, as inflation falls (thank God!) this year, we will forget about the 3.2% added in 2024 and the famous 8.3% added in 2023 (when inflation hit us the hardest) and settle at 2.5%.
Not only that, but the situation is expected to normalize in the coming years, which means that the tail could be 2%, 1%, or even none at all.
And no, they are not taking money from you; the situation will simply normalize economically, and the “patch” will no longer be required to mitigate the effects of inflation on the economy; you will continue to receive your base payment as usual.
Changes in retirement
Starting 2025, the retirement age will be raised to 67, with the option to retire at 70 to increase earnings by 8% per year. The early retirement age remains 62. However, you will not receive 30% of your entitlement, so it’s important to weigh your options carefully.
Why is the retirement age changing? Because humans live longer lives and maintaining a low retirement age would render the pension system unsustainable, the central government has decided to postpone the retirement age by nearly one year.
Earn more? You’ll pay more.
That is correct; Social Security income will be taxed. In 2025, this threshold will rise to $176,000, implying that those who earn more will also contribute more to the system. In short, the more you earn, the higher your taxes will be. Remember that this will only affect users who earn more than the aforementioned figure.
How do I collect SSA benefits?
It’s not difficult, but you must meet the prerequisites for your application to be processed. We’ll go over how to apply below.
- Proof of citizenship: you’ll need to prove that you’re a United States citizen, through your birth certificate or passport.
- Your age through a document that supports your date of birth (it doesn’t matter if it’s a hospital medical record, passport, or religious record).
- A valid, current official ID that contains your full name and date of birth, which can be a driver’s license, tax identification card, or passport.
Once you’ve submitted these documents, you’ll have to wait to find out whether or not you apply for SSA benefits.
As you can see, the changes to Social Security for this coming year may seem a bit chaotic, but they were designed so that the system continues to not work in the coming years.
We are aware that these changes will have an impact on millions of people and that is why we advise you to start planning your future to make the most of the benefits that will correspond to you when you decide to stop working.