4 Social Security Changes Going Into Effect in January
Once you get to a certain point in life, Social Security can play an important part in your financial planning. Whether it’s managing your mortgage payment or balancing it with your retirement savings, many seniors count on the payments to help sustain their lifestyle. However, after a chaotic year marked by broad cuts to the federal government, it’s challenging to know what to expect for the year ahead. If you’re trying to get a handle on what’s to come, here are some Social Security checks going into effect this month you might want to know about.
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1. Your payments should increase.
Over the years, you may have noticed slight changes to the amount on your Social Security checks each month. And this month, you might notice the sum you receive will be slightly higher than in December.
This year, the Social Security Administration (SSA) is implementing a 2.8 percent cost-of-living adjustment to payments, according to MarketWatch. This should roughly factor out to an extra $56 per month.
While that little extra bump might seem like a nice addition, there is a bit of a downside to it. Officials in the Trump administration calculated that the actual cost-of-living increases last year were 3 percent, making the additional pay slightly short, MarketWatch reports.
2. Earnings-test limits are also going up.
It’s not just retirees who collect Social Security. But if you’re one of the many who still work while receiving benefits, you might want to take note, as your allowed income is getting a bump as well.
Starting this month, earnings-test limits are increasing from last year, from $23,400 to $24,480, according to the Motley Fool. Anyone who surpasses that amount will have $1 withheld for every $2 over the threshold.
Those who reached the full retirement age of 65 last year will also see a considerable earnings-test limit increase, rising from $62,160 last year to $65,160 this year. The withholding rate for this group is $3 for every $1 over the threshold.
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3. Monthly maximums are increasing.
If you’re someone who takes in the full amount provided by Social Security, things may change for you this year. That’s because the maximum monthly benefit is also going up for those of full retirement age from $4,018 to $4,152, according to the Motley Fool.
4. The wage cap is going up.
One major change that could affect more than people who are just collecting is this year’s increase in the Social Security wage cap, which is a set amount that limits how much you pay into Social Security.
As of last year, the threshold was set at any income above $176,100—but in 2026, that will go up to $184,500 to account for inflation, per the Motley Fool. That means anyone who is in a higher income bracket could see a change on their pay stubs.