The Social Security Administration plans to implement several key changes that will affect over 70 million beneficiaries, including retirees, persons with disabilities, and veterans’ beneficiaries, effective January 1, 2025. The changes above are aimed at controlling inflation, securing the trust fund, and improving financial stability for users.
Cost of living adjustment (COLA), changes to full retirement age (FRA) and taxable earnings limit
The 2.5% monthly boost for Social Security benefits can help underpin monthly checks, giving some $50 lift on average per check, a move that could partially be compromised by rising Medicare costs, which realized a 14.5%premium increase in 2022. Therefore, beneficiaries should be preparing for possible net drops in the coming payments due to these expenditures.
According to proposals in Congress, the full retirement age will rise systematically to 67 years applicable to people born after 1960 and perhaps toward ages 68 or 70 for people born after 1970. This measure is meant to ease economic strain on the system just a lot more for workers who have for too long had physically laborious and low-wage jobs.
The cap for taxable earnings under Social Security will rise from $168,600 to $176,100, and contributions from high-income workers will rise. Although this will enhance the system’s revenue base, however does not do much in solving the long-term solvency problems.
Recommendations for beneficiaries of social security:
Beneficiaries of Social Security Disability Insurance (SSDI) will receive payment increases and increases in income limit that may be earned without the risk of loss benefits while providing additional financial flexibility. A few tips for beneficiaries are:
- Review estimated benefits using the mySocialSecurity portal.
- Use strategies such as Medicare Advantage or health savings accounts to budget for medical expenses.
- Consider delaying retirement if you want higher monthly payments (up to 8% per year after your FRA).
- Seek advice from financial advisors regarding saving for retirement.
