Anticipation is brewing as the Social Security Administration (SSA) gears up to unveil the long-awaited 2025 cost-of-living adjustment (COLA) this week. However, the wait is not over just yet as the SSA awaits September inflation data, set to be released on October 10, before making the much-anticipated announcement.
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Aside from the forthcoming COLA announcement, October 10 will bring more updates from the SSA relating to the 2025 changes. Here are two significant pieces of information to keep an eye out for.
Exploring 2025 Earnings-Test Limits
One intriguing aspect of Social Security is the ability to earn income while still receiving benefits. However, there are earnings-test limits for individuals working before reaching full retirement age. The current wage cap stands at $22,320, or $59,520 for those close to full retirement age, with potential increments expected in 2025. This adjustment could allow individuals to earn more without impacting their Social Security benefits.
It’s important to note that withheld benefits are not lost; they are returned once full retirement age is reached. Nonetheless, an increase in earnings limits could provide some relief for those still a few years away from retirement.
Insights into the 2025 Wage Cap
Each year, a wage cap determines the amount of income subject to Social Security taxes. With the 2024 wage cap set at $168,600, any earnings beyond this threshold are exempt from Social Security taxes. An inflation-adjusted raise in the wage cap for 2025 could have broader implications beyond individual earners.
While retirees may not view the wage cap hike as directly relevant, it plays a crucial role in addressing Social Security’s impending revenue challenges, potentially averting benefit cuts down the line.
The upcoming announcement of the 2025 Social Security COLA has garnered significant attention, but additional key information will be shared on October 10. Engage with the SSA’s website that day to stay informed about the changes in store for the coming year.
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