5 Big Changes to Social Security Benefits in 2025

The Social Security Administration just released this statement right here, announcing five major changes that they're going to be making to Social Security benefits starting in the year 2025. Let's go through these changes together, starting with point number one, the cost of living adjustment. For your reference, the cost of living adjustment is the amount that Social Security payments increase in order to make up for inflation, and it's calculated by using the year-over-year Specifically, the government averages out the year-over-year changes for the months of July, August, and September, and measures them against the previous year. And so, looking at it historically, in 2021, Social Security recipients got a 1.3% bump in payments. In 2022, the increase was 5.9%. In 2023, inflation was rampant, and so it was 8.9%. In 2024, the increase was 3.2%. And for this upcoming year, for 2025, the increase will be 2.5%, meaning that starting on January 1st of next year, recipients of Social Security will have their checks increased by 2.5%. In terms of the dollar amount, this change will, quote, amount to an average increase of $50 in monthly benefits for retired workers on Social Security beginning in January. $50 more per month, which translates to about $600 more per year on average. Then, the second change that's coming down the pipe to the program is a change in the retirement earnings test. This has to do with people who are still earning an income while at the same time collecting Social Security benefits. By doing it this way, their Social Security payments are reduced if their earnings exceed certain limits. And these limits, they fall into one of two categories. There are limits for people who retire early and different limits for those who retire at the official government retirement age. And so, let's start with those who retired early. Currently, you can earn up to $1,860 per month or $22,320 per year before the Social Security Administration will start withholding benefits. After you cross that threshold, they deduct benefits from you at a rate of $1 worth of benefits for every $2 above that limit. And so, the numbers I just read were for this year. Starting next year, however, in 2025, early retirees, they will be able to earn $1,950 per month or $23,400 per year before their Social Security benefits start getting withheld. So, it's about a 5% increase. Then, in terms of people who have already reached full retirement age, the rule is still the same, but they can earn a lot more. Currently, full retirees, they can earn $4,960 per month or $59,520 per year before their benefits start getting withheld. However, with this change, starting in the year 2025, those numbers will increase up to $5,180 per month or $62,160 per year. Afterwards, the Social Security Administration deducts benefits from that group at the same rate, $1 in benefits for every $2 above that limit. Then, aside from the limits, there is another change, change number three, which is an increase in benefits for spouses as well as disabled workers. According to the administration's update, here's how much the increase will be. And I will quickly mention that these are just averages. People's individual situations, of course, differ. And so, these are the average changes in benefits across the entire board. The average widowed mother with two children will see an increase from $3,669 to $3,761. Retired widows and widowers who are living alone will see their benefits increase from $1,788 to $1,832. And the benefits for a disabled worker with a spouse who has at least one child will increase from $2,757 to $2,826. If you do the math on those changes, it's basically a 2.5% increase across the entire board, which is actually on top of change number four, which is an increase to the maximum Social Security benefit that an individual person can receive. Currently, in the year 2024, a person who has reached full retirement age can receive a maximum of $3,822 per month in Social Security benefits. However, this change that just came from the administration will make it such that starting on January 1st, the maximum benefit that a person can receive will now be $4,018 per month, an increase of about 5%. And so, for the average person who receives Social Security benefits, these are all, you can say, net positives. Bigger checks every single month, higher limits, more money that you can earn on the side before cutting into your benefits, and so on. However, at this point, you might be asking yourself the very obvious next question. Where is all the money coming from to fund these increased payments? I mean, after all, the government itself is running at a $2 trillion deficit per year, and so it's not like it's flush with extra cash. Well, the answer to that question is simple. The money is coming from us, the American taxpayers. That's because the fifth change that is being implemented by the administration in the year 2025 is an increase in the amount that Americans are being taxed. This applies to me. All right, just to pause here for a super quick moment. Listen, it's obvious that the financial system is not looking too great. After being pumped up with trillions of virtually free government dollars for many, many years now, well, the stock bubble might actually burst in the near future. And in that process, unfortunately, it could take away the nest egg of anyone who happens to be exposed to it. And so consider taking this opportunity to diversify into something which is beyond the grasp of Washington, D.C. and Wall Street, physical gold and silver. 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You see, alongside this 2.5 increase in social security benefits, there is a corresponding increase in the amount of your income that is subject to social security taxes. You see, currently in the year 2024, the maximum earnings that are subject to social security taxes are $160,600, meaning that everything you make up until that amount, you have to pay social security taxes on. Usually at a rate of about 6.2%, if you're employed by someone, then your employer makes up for the other 6.2%, or if you're self-employed, you pay 12.4% as a whole. However, starting in the year 2025, that maximum earning limit will be raised to $176,100. In practical terms, it means that more of a working person's income will now be subject to taxes in order for the government to be able to increase the social security benefits to retirees. And perhaps the most interesting part about it is that despite this tax increase affecting about a full 7% of the working population, no one voted for it. No one debated it. There was no public comment period, nothing like that at all. Instead, an administrative agency within the government, they decided that more of a person's income should be taxed at either 6.2% or 12.4%, and that's it. It reminds me of that very famous quote from Frederic Bastier, quote, Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone. And so those are the five changes coming down the pipe for social security beneficiaries in the year 2025. If you would like to read the entire full length update from the Social Security Administration, I'll throw a link to it. You'll be able to find it down in the description box below. And also, as an aside, I'd like to ask you something. I've been thinking about doing a longer episode on the fact that the Social Security Administration as a whole is becoming insolvent. Basically, the trust fund that's funding the beneficiaries for social security is on its way to becoming insolvent within the next nine years. Let me know if you would like a full length episode explaining exactly why that is, why the situation is untenable, and why no politician is willing to do anything about it. If you want to see that episode, leave a comment in the comment section below. I'll be reading through them. And if enough people want to see it, I will make it in the probably next week. And also, if you appreciate this content, well, take a quick moment to smash those like and subscribe buttons so that it can reach ever more people via the YouTube algorithm. And then until next time, I'm your host, Roman from the Epoch Times. Stay informed. Most importantly, stay free.