Major changes to Social Security regardless of Trump’s presence

Pensioners constitute a larger percentage of citizens than ever before birth rates over the past few years, they have fallen to historic lows, reaching levels below the replacement rate necessary to sustain the U.S. population.

Currently, almost 73 million people across the country receive them Social Security Administration benefits under a broad federal social safety net program.

There will be few changes to Social Security in 2025, regardless of President-elect Donald Trump’s actions during his second term. Here’s a summary of four changes you should prepare for, mainly due to inflation and wage trends.

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COLA adjustments

The cost of living adjustment, or COLA, is one of the largest changes It is to be delivered to the Social Insurance Institution next year.

“COLA is linked to changes in inflation, so as the inflation rate falls, COLA also falls,” Kevin Thompson, financial expert, he said Newsweek. “This will be the lowest COLA increase since 2021, when the increase was 1.3%.”

In January 2025, Social Security benefit recipients will see their payments increase by 2.5%, an increase of approximately $48 per month for the average worker and an estimated $39 per month for the typical worker with a qualifying disability.

Over the past decade, COLA content has increased at an average of 2.6% per year, although last year COLA growth was calculated to be 3.4%.

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Medicare premium increases B

Social Security beneficiaries typically have their Medicare Part B premium deducted directly from their monthly payment if they are enrolled in the federal health insurance program.

Medicare is federal health insurance program for citizens aged 65 and over. It also covers eligible beneficiaries under the age of 65 with certain medical conditions. In 2019, an estimated 56.1 million people nationwide received Medicare Part B.

Starting in 2025, Social Security beneficiaries on Medicare Plan B will begin to have $10.30 more per month withheld from their monthly payment.

This is because Medicare Part B premiums will increase from $174.70 to $185 per month.

While the premium increase will be offset to some extent by COLA adjustments, it is a change that beneficiaries should monitor.

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“I would also like to remind seniors that Social Security’s mandatory Medicare premiums are increasing at a rate of 7.42% for Part B and 6.73% for Part D,” said Joseph Patrick Roop, president of Belmont Capital Advisors Newsweek. “This is an important factor in why adjusted Social Security income declines many times over even after a small COLA.”

Earnings test correction

Workers are subject to a federal policy called the earnings test cap, which can temporarily reduce their Social Security benefits until they reach full retirement age.

In 2024, the earnings limit for people who did not reach full retirement age until a later year was $22,320. In 2025, the earnings eligibility limit will increase to $23,400, and beneficiaries who have not reached full retirement age will have $1 of their Social Security taxes withheld for every $2 of earned income.

This means beneficiaries earning more than $23,400 a year will be able to keep more than $1,000 more of their money each year starting in 2025 before facing benefit cuts.

Tax increases

In 2025, more people paying National Insurance contributions will have to pay tax on the scheme.

This is because the maximum taxable earnings limit, i.e. the highest income subject to National Insurance tax, will increase.

In 2024, the Social Security tax cap was $168,600, meaning people who earned more than that amount were not required to pay the tax. The 2023 tax limit was $160,200.

In 2025, the maximum taxable earnings limit will increase to $176,100. Any current employee earning up to this amount will be liable to pay National Insurance tax of 6.2% on their income, for both the employee and the employer.

What’s next?

Trump promised to stay away from cuts to Social Security during this year’s campaign.

But experts warn that reforms are needed as the federal program faces a looming crisis.

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Social Security estimates there will be a $3.5 trillion shortfall over the next decade Tax Foundation.

“Don’t be afraid that Social Security will cease to exist. That’s not going to happen,” said Stephen Goss, chief actuary of the Social Security Administration, during a panel discussion in October. “The challenge for Congress is to come up with ways to either lower scheduled benefits, raise tax revenues, or some combination of the two, which is what they have always done throughout the history of this program.”