How Social Security Benefits Will Rise in 2025: What Millions of Americans Need to Know

Indeed, Social Security is a lifeline for many Americans during their retirement years. The monthly benefit amount will increase by an average of $49 a boost that will take it from “$1,927” to “$1,976” under the 2025 cost-of-living adjustment (COLA). This increase will help, but most beneficiaries, especially those with little personal savings, find the amount insufficient in view of the increasing expenses around them.

To address this widespread concern, Congress passed the Social Security Fairness Act, which is intended to help benefit 2.8 million Americans significantly. Here is what you need to know about those changes and their possible effects.

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Social Security Fairness Act

The US Senate passed the Social Security Fairness Act on December 21, 2024, and it now awaits the signature of President Biden. This bipartisan bill would eliminate two provisions that reduce Social Security benefits for some government employees and families:

1. Windfall Elimination Provision WEP: This provision reduces Social Security benefits for retirees who get pensions from jobs that never contributed to Social Security. This primarily affects former government employees, such as teachers, firefighters, and police officials.

2. Government Pension Offset GPO: This offsets spousal and survivor benefits to those receiving a government pension but had a job not covered by Social Security.

The Fairness Act will repeal WEP and GPO for future benefits from December 2023 onward, which will allow such people to receive larger monthly amounts in the future. Eligible retirees will also get past payments for reduced benefits provided from December 2023 until the enactment of the bill.

To whom will it benefit?

Directly, this bill would entitle the following individuals:

2.01 million retired workers

734,000 spouses or survivors receiving spousal benefits.

This is a long-awaited victory for public service families who have been unjustly affected by these provisions.

Concerns

For example, though the immediate impact of the Fairness Act is mostly going to be beneficial for all hurt beneficiaries, it raises some clouds for the long-term health of Social Security as well.

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1. Trust Fund Dewleisure moment Risk

In 2034, Social Security’s trust funds are likely to run out.
In 2035, benefits would be reduced by about 23% if there were no reforms.

2. Consequences of the Fairness Act

This legislation could add $196 billion in net costs to Social Security, thus delaying the exhaustion date even further by another six months.
The urgency for reform keeps increasing because lawmakers need to address the revenue shortage as soon as possible.

Raise taxes: In some ways, Social Security taxes could be levied on working people.

Reduce benefits: Future retirees might find benefits reduced.

Combination: There could also be a mix of tax increases and benefit reductions.

What should beneficiaries do?

Keep an eye on legislative updates: Be on the lookout for legislative updates concerning Social Security reforms. As we get closer to the date of trust fund expiration, things will begin to heat up in the legislative sessions.

Encourage change: Contact your representatives and let them know what you think about the future of Social Security. Join in and make it broad so that it can really help steer the debate on possible solutions here.

Maximize your benefits: There are a few strategies to increase what’s received from Social Security, and this includes extension of your claiming date. You can check out the tools and available resources to maximize your retirement income.

Maximizing benefits

Most retirees are unaware of how benefits may be maximized by means of Social Security. For example, consider:

Delaying benefits: You would receive a larger monthly amount if you claim benefits after your full retirement age.

Coordination with spouse: Coordination with that of your spouse can give additional income.

Investigating these options could add up to $22,924 to your retirement income-an increase that could improve your financial security in your golden years.

Conclusion

It is a great step for the countless millions of Americans whom this act would benefit, yet it is also a reminder of the immediacy of a long-term solution to the funding challenges that it will present. The best way of augmenting the financial benefit of these changes toward a secure retirement future for oneself is to stay informed and take action.