Retirement plans are changing. If you’re thinking about when to retire, it’s important to know that things are going to look different starting in 2025, especially when it comes to Social Security.
The rules are changing, and these updates might impact your benefits, so it’s time to get familiar with the new updates coming your way.
Full Retirement Age (FRA) Is Getting Pushed Back
In the past, you could start claiming full Social Security benefits at age 65. But times are changing. Back in the 1980s, Congress made adjustments to account for people living longer. Since then, the full retirement age (FRA) has been gradually rising, and if you were born after 1958, your FRA has likely already increased.
For example, if you were born in 1958, you needed to wait until you were 66 years and 8 months old to claim full benefits.
Now, if you were born in 1959, you’ll need to be 66 years and 10 months old to claim the full Social Security benefits you’ve been paying into. And this shift won’t stop there. It’s expected that the FRA will continue to rise as people live longer.
While you can still claim your benefits before reaching the FRA, doing so will mean a reduced amount. To get the full benefit, you’ll need to wait a little longer than the traditional 65th birthday.
Cost of Living Adjustment (COLA) in 2025
One of the yearly updates you’ll want to keep an eye on is the Cost of Living Adjustment, or COLA. For 2025, the adjustment will be 2.5%, which is the smallest increase since 2021.
While inflation is cooling down, many consumers are still struggling with high prices for everyday goods. This smaller increase means your benefits will still rise but not as much as in previous years.
For those who rely on Social Security to cover a portion of their living expenses, this slight increase will help, but it might not go far enough to match the rising cost of living.
The Social Security Taxable Earnings Will Increase
If you’re working and paying into Social Security, you should know that the income cap on taxable earnings is also increasing. Right now, all workers pay 6.2% of their earnings into Social Security, up to a certain income level.
In 2024, the cap is $168,000, but in 2025, it will rise to $176,100. This means if you’re earning more than $176,100, you won’t pay Social Security taxes on that extra income.
But for those who earn less, this change doesn’t impact you much, other than the fact that you may be paying a little more into the system.
A New Social Security Administration Commissioner
In another big change, the Social Security Administration (SSA) is getting a new leader. President-elect Donald Trump has selected Frank Bisignano, chairman of Fiserv, to be the new SSA commissioner. Bisignano is known for transforming large companies and has big plans for the future of Social Security.
“Frank is a business leader, with a tremendous track record of transforming large corporations,” Trump said. “He will be responsible for delivering on the Agency’s commitment to the American people.”
Until Trump takes office, Carolyn Colvin will continue serving as the acting commissioner of the SSA. However, with Bisignano stepping in, many are wondering what new ideas he will bring to the table and how the agency might be restructured to better serve Americans.
Why These Changes Matter to You?
If you’re planning for retirement, it’s important to keep these changes in mind. The full retirement age is increasing, meaning you’ll need to work longer to get the full benefits you’ve earned.
At the same time, the cost of living adjustment won’t be as high, which could affect how far your benefits stretch. The increase in taxable earnings may mean you pay a little more into the system, but it won’t affect everyone.
And with a new SSA commissioner in place, we could see changes to how the Social Security system operates. While it’s too soon to tell exactly what those changes might be, it’s important to stay informed and be prepared for the updates ahead.
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