5 2025 Social Security Rules That Take Effect Today

This is the time of year people often make significant changes in their lives. Many individuals start new jobs, shift insurance plans, and simultaneously strive to fulfill their personal goals and ambitions, like those resolutions they made for the new year.

In the midst of everything else, people will also have to get accustomed to the government's modifications to laws regarding taxes, retirement accounts, and Social Security. For individuals in retirement and those currently working, this year's key considerations include the following five significant Social Security updates:

in your email inbox each business day.

Annual increase of approximately 2.5% to the cost of living, typically applied to various expenses or allowances, such as wages or benefits.

Beneficiaries won't receive the increased Social Security benefits until December, but because the Social Security Administration pays benefits in the month following the date they're due, the first checks reflecting the new amounts will arrive in December.

The timing of your January Social Security check depends on your birth date.

• January 8th, 2025 falls within the first ten days of the month.
• Born between January 11th and 20th, January 15, 2025.
• Happening in the last ten days of January, specifically between the 21st and 31st.

If you're receiving Supplemental Security Income (SSI), your first payment in 2024 was on December 31st of that year. This is the normal schedule, unless the first day of the month coincides with a weekend or holiday, such as New Year's Day, in which case payments are made on the next weekday.

2.
Retirement benefits may be affected due to increased work credit requirements for Social Security.

To qualify for retirement benefits, workers will need to earn more in income beginning in 2025 to earn one Social Security work credit. Currently, you must earn a total of 40 of these credits to qualify, and there's a yearly limit of four credits that can be earned.

In the year 2024, for every $1,730 earned, you got one credit. Starting in 2025, it will take $1,810 in earnings to get one credit. This change is unlikely to be a substantial obstacle for most individuals, including part-time workers who will likely earn the $7,240 needed to receive their four 2025 credits.

Also called increasing the Social Security tax or payroll tax cap, this concept would limit the amount of earnings subject to Social Security taxes, which are currently set at $132,900 in 2023. Proposal advocates suggest removing the current cap altogether, so more people contributing to the system contribute more to Social Security.

Next year, some workers might pay more in Social Security payroll taxes due to an increase in the amount of earnings subject to the tax. In 2024, you pay these taxes only on your earnings up to $168,600, but in 2025, you'll owe them on your earnings the first $176,100 you earn.

We already pay Social Security taxes on virtually all our earnings, so this shouldn't be a major problem. However, high-income earners may end up paying an additional $465 a year if they hold traditional jobs or $930 a year if they are self-employed.

4. Earnings Threshold Limit

Starting in 2025, individuals below full retirement age will receive slightly more in Social Security benefits before the government takes any money out of their checks. However, those who are 65 or older, regardless of their annual income, won't have to worry about the government withholding money from their benefits.

Next year, people under full retirement age will lose one dollar in benefits for every two dollars they earn over $23,400. Those who have reached full retirement age this year will only lose one dollar in benefits for every three dollars they earn over $62,160, if they earned that much during the calendar year.

5. A higher full retirement age for people born in 1959 compared to those born in 1958

As of this year, the age requirement for full retirement benefits is 66 and 10 months for individuals born in 1959. This milestone age has been gradually increasing over the past few years and will reach a final peak of 67 for those born in 1960 and after next year.

Before delaying on a personal goal or achievement, make sure you're not cutting yourself short, unless you truly have a critical health or financial problem that leaves you no choice but to postpone.

The Social Security changes mentioned are first taking effect in 2025, though they follow an annual pattern. It's crucial to note these adjustments, whether you're employed or claiming benefits, as they will become a regular occurrence, persisting into 2026 and subsequent years.

"Social Security's Extra Money" That Many Retirees Forget

As time goes on and you become a pro at optimizing your Social Security benefits, we believe you can retire with a sense of security and serenity.

Check out our "Social Security Secrets" article »

.

Share :