Social Security and Retirement Plans Changes in 2025

Welcome to today’s blog post! New increases are coming in 2025 for Social Security beneficiaries thanks to a cost-of-living adjustment. I will also discuss the contributions to IRA and 401(k) plans.

Key Points:

• Social Security beneficiaries will receive a bump up of 2.5% due to a cost-of-living adjustment (COLA) for 2025. The increase will also affect Supplemental Security Income (SSI) recipients.
• Social Security tax increased to a maximum of $176,100.
• The IRA and 401(k) contribution recently announced by the IRS is $8,000 for individuals over 50; $7,000 for those under 50 (IRA).
• 401(k) increased a minimal amount, but it is $23,500 for individuals under 50; $31,000 for those over 50.

Social Security Cost of Living Adjustment (COLA)

Social Security beneficiaries will increase in 2025 thanks to a COLA (cost-of-living adjustment). The increased amount is 2.5%, but it is still short of 3.2% from this year. The increased benefit will affect more than 72 million recipients. The bump in benefits also applies to recipients of Supplemental Security Income (SSI).

You should receive notice of the increase over the next few weeks, with the benefit increase to begin in January. If not, please make sure to follow up with the Social Security Administration. You can contact the SSA via this link.

The Social Security tax also increased to a maximum of $176,100. This is an increase from $168,600. The full retirement age will be 66 years and 10 months in 2025.

IRA and 401(k) Contribution Limits for 2025

The Internal Revenue Service (IRS) has also increased contributions for next year with IRA and 401(k) accounts for 2025. For silver-haired folks like me who are over the age of 50, the maximum contribution amounts to Individual Retirement Accounts are $8,000, and if under 50, it is $7,000.

The contribution limits for 401(K) have increased, but it was a minimal amount for those under 50. That amount increased by $500 to $23,500. If you are over fifty years old, the amount increases to $31,000.

It’s important to note that generally speaking, your IRAs and 401(K) are protected in bankruptcy, but there are certain steps you can take that result in those retirement funds not being protected. You can read more on this issue via this link.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.