The Social Security Administration will send out the biggest check it has ever made in less than three months. Thanks to the new 2.5% cost of living adjustment (COLA), the people who get the most from Social Security will get $4,995 a month in 2025.
That is more than $59,940 a year. It is important to know, though, that not all beneficiaries will be able to get this maximum reward. They must first meet strict requirements.
As part of these standards, beneficiaries must have received benefits until they turned 70 years old and paid into Social Security based on their highest taxable income over the last 35 years.
Social Security will pay more to retirees in 2025 than ever before
The Social Security Administration changes the highest payment every year to reflect changes in the way Social Security benefits are calculated.
The first part of this method is how the government figures out your average indexed monthly earnings (AIME). This is your average monthly wage over the 35 years when you made the most money. It takes inflation into account.
You will not get any extra salary years if you worked less than 35 years.
It is important to note that AIME does not always add up all of your earnings for the year, but for most people, it does. For people who make a lot of money, this might not be true because there is a limit on how much income is taxed for Social Security.
In 2024, that amount will be $168,600. In the past, it has been less. If you make more than this amount, your Social Security payments will not go up.
It is important to remember that average wages tend to go up over time, which means that average AIME also goes up. This helps explain why the maximum Social Security payment went up.
How does the Social Security Administration calculate the beneficiary’s primary insurance amount (PIA)?
Here are the steps that beneficiaries should read to understand how the Social Security Administration figures out their main insurance amount (PIA):
- Divide the first $1,174 of your AIME by ninety percent.
- Any sum greater than $1,174 and up to $7,078 of your AIME is multiplied by 32%.
- Any sum greater than $7,078 is multiplied by 15%.
- Add your results from Steps 1–3 and round down to the closest $0.10.
This recipe stays pretty much the same. The only things that change over time are the bend points, which in this case are $1,174 and $7,078. The government changes the bend points every year, which also causes the usual benefits to rise over time.
Your benefit is always based on the bend points that were in place in the year that you turned 60, no matter when you apply. For most people, there is also one more step in the process of figuring out their Social Security check.
The government will change your PIA from one amount to another based on your age when you file your claim and your full retirement age (FRA). If you were born in a certain year, your FRA should be between 66 and 67.
Who will be eligible to receive the maximum Social Security benefit?
As previously mentioned, to be eligible for the maximum benefit, you must have worked for at least 35 years, earned the maximum amount payable to Social Security payroll taxes in each of those 35 years, and applied for benefits at age 70 or later.
Most people will be unable to pull this off because they did not earn a sufficient salary during their working years. However, those who can do so will earn a record $5,108 per month in 2025.
This is significantly more than the average benefit of $1,920 that retirees received in August 2024. This figure is anticipated to increase to $1,968 once the Social Security Administration adds the 2.5% cost-of-living adjustment (COLA) to beneficiaries’ checks.
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