Chainkeen Exchange-A big Social Security shake-up is coming in 2025. Are you prepared?

Although Social Security has been around for many decades,Chainkeen Exchange the program's rules are subject to change. And that makes sense.

Social Security needs to be able to adjust for inflation in several regards. And in 2025, a number of key changes are likely to arrive that could impact retirees and workers alike. Here are some of the most notable shifts to prepare for now.

1. A cost-of-living adjustment

Social Security benefits are eligible for automatic cost-of-living adjustments (COLAs). The purpose of COLAs is to help recipients maintain their buying power as inflation drives living costs upward.

At the start of 2024, Social Security benefit rose 3.2%. Next year's COLA, however, may not be as generous. Initial estimates are putting that number at 2.63%, but that's subject to change based on how inflation trends during the third quarter of the year.

Seniors on Social Security should prepare for a smaller COLA in 2025. That could mean adjusting your spending to try to reduce expenses, or dabbling in the gig economy for extra cash.

2. A higher earnings-test limit

Seniors on Social Security are allowed to also earn income from a job. But for those who haven't yet reached full retirement age, there are income limits to keep in mind. Going beyond the annual earnings-test limit means having some of those Social Security benefits withheld (though rest assured that withheld benefits are repaid to you once you reach full retirement age).

In 2024, the earnings-test limit is $22,320. However, if you'll be reaching full retirement age by the end of the year and aren't there yet, that limit is $59,520.

In 2025, the earnings-test limit is likely to increase, which will give you an opportunity to earn even more money without having it negatively impact your Social Security benefits. So if you've been aiming to ramp up on gig work or increase your hours at a part-time job, it could pay to hold off until January to do so.

3. A larger wage cap

Social Security's main source of funding is payroll tax revenue. But it's not a given that workers will pay Social Security taxes on their entire income.

Each year, a wage cap is set to determine how much earnings are subject to Social Security taxes. Currently, that cap sits at $168,600. But in 2025, it's likely to rise.

Now if you don't expect your earnings to be higher than $168,600 in 2025, then this is nothing to worry about. But if you're a higher earner, now may be the time to sit down with a tax professional and work on some strategies to lower your tax burden overall. And if you're maxed out in that regard, budget carefully to account for the fact that you may lose more of your paycheck to Social Security taxes in the coming year.

4. A higher earnings threshold to earn work credits

To collect Social Security in retirement, you generally have to earn a certain amount of money and pay taxes on that sum throughout your career. Granted, there are options for collecting Social Security without working, such as filing for spousal benefits. But if that's not an option, then you'll want to make sure you earn enough to be eligible for benefits when you're older.

For that to happen, you need to accrue 40 work credits in your lifetime. And you can only earn up to four per year.

The value of a work credit is currently $1,730. But in 2025, you'll most likely need to earn more than that for a single credit. So if you're a part-time worker who's trying to qualify for Social Security, pay attention to what the earnings requirement per credit becomes. You may need to increase your hours to ensure that you're getting the four credits you're after in the coming year.

The changes that apply to Social Security in the new year won't just impact retirees. They have the potential to affect many workers as well. Because of this, it's important to pay attention to what's happening with Social Security so you can adjust accordingly.

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