In mid-October each year, the Bureau of Labor Statistics releases its long-awaited report on changes (usually increases) in the consumer price index over the past 12 months. Why is this esoteric little government report—actually called the Consumer Price Index for Urban Salaried and Service Workers—so popular? Because for the past 50 years, it’s the ratio that determines the cost-of-living adjustment (COLA) that Social Security recipients will receive in the following year.

Since my column has a long run, what I report here is not news to most of my readers. As I’m sure you’ve already heard, all 68 million Social Security recipients’ checks are growing by 2.5% in 2025.

I’m always afraid to mention COLAs in this column because every time I do, I’m inundated with emails from readers complaining that the raise isn’t enough.

However, here’s the problem: Many economists and social planners believe that Social Security COLAs are too generous! (I’ve explained why in previous columns, but I don’t have space to get into that discussion today.) That’s why most discussions of long-term Social Security reform include proposals to reduce cost-of-living increases.

But for now, that’s neither here nor there. Let’s get back to the 2025 Social Security COLA. Because of these increases, the average monthly retirement check will be $1,976 in 2025, an increase of $49 from the 2024 level. The maximum Social Security check for a worker reaching full retirement age (FRA) in 2025 will be $4,018 compared to $3,822 in 2024. Please note that $4,018 is the maximum for someone meeting FRA in 2025. This does not mean it is the maximum amount. Anyone can receive the social security payment. There are millions of Social Security recipients who receive much more than that, primarily because they worked well past the FRA and/or delayed starting benefits until age 70.

Here is another important point about COLA. Many readers have asked me if they need to file for Social Security benefits in 2024 to get the COLA that is paid in January 2025. The answer is no. The COLA will be included in the benefit calculation formula. So even if you don’t file for Social Security until next year or the year after, you’ll still get the 2.5% increase.

While this is a Social Security column, I must mention the upcoming Medicare Part B premium increase, which is deducted from most people’s Social Security checks. At the time of writing this column, the first core Part B for 2025 has not yet been announced. But it is expected to be $185. That’s $5.20 more than the rate in 2024. As has been the case for 20 years now, wealthy people will pay more than the base premium.

I don’t want to get into the complicated issue of Medicare premiums other than to make this quick point: Even though they are linked in the minds of most senior citizens, Social Security and Medicare are completely separate programs administered by completely separate federal agencies. and have completely separate rules and regulations regarding their benefit and pay structures. For example, we’ve already explained how Social Security COLAs are calculated. The Medicare Part B premium increase has nothing to do with the Bureau of Labor Statistics’ consumer price index. Instead, by law, it must be set at a level that covers 25% of the cost of running the program. Taxpayers take the remaining 75%. (Again, rich people pay more than the 25% rate).

Another measuring stick called the “national wage index” is used to set increases in other provisions of the law that affect Social Security recipients and taxpayers. These include increases in the amount of wages or self-employment income that is subject to Social Security tax, the amount of income needed to earn a “coverage quarter,” and penalty limits on Social Security income.

The Social Security taxable income base will increase from $168,600 in 2024 to $176,100 in 2025. In other words, people who earn more than $176,100 in 2025 will no longer have Social Security taxes deducted from their paychecks. payment once they reach that threshold. This has always been a very controversial provision of the law. (Bill Gates pays the same amount of Social Security tax as his plumber!) I think it’s a pretty good bet that any eventual Social Security reform package will include an increase in the wage base.

Most people need 40 Social Security work credits (sometimes called “coverage quarters”) to be eligible for monthly benefit checks from the system. In 2024, people who worked earned a credit for every $1,730 in taxable Social Security income. But no one earns more than four credits a year. In other words, once you’ve earned $6,920, your Social Security file has been credited with a maximum of four credits, or quarters of coverage. In 2025, the credit limit goes to $1,810, meaning you’ll need to earn $7,240 before you can get the maximum four credits credited to your Social Security account.

People under full retirement age who receive pension or survivor benefits but are still working are subject to limits on the amount of money they can earn and still receive all Social Security checks. This limit was $22,320 in 2024 and will be $23,400 in 2025. For every $2 a person earns above these limits, $1 is withheld from their monthly benefits.

There is a higher earnings threshold in the year a person reaches full retirement age, which applies from the beginning of the year to the month the person reaches FRA. (The income penalty goes away once a person reaches that magic age.) That threshold increases from $59,520 in 2024 to $62,160 in 2025.

Several other provisions are also affected by inflationary increases. For example, people on disability benefits who are trying to work can generally continue to receive those benefits as long as they are not working at a “substantial” level. In 2024, the law defined substantial work as any job that pays $1,550 or more per month. In 2025, this increases to $1,620 per month.

Finally, the basic federal payment level for Supplemental Security Income for an individual increases from $943 in 2024 to $967 in 2025. SSI is a federal assistance program administered by the Social Security Administration, but it is not a benefit of social security. It is paid out of general revenue, not social security taxes.

If you have a Social Security question, Tom Margenau has two books with all the answers. One is named Social Security – Simple and Smart: 10 easy-to-understand fact sheets that will answer all your Social Security questions. The other is Social Security: 100 Myths and 100 Facts. You can find the books at Amazon.com or other bookstores. Or you can email him at [email protected]. To learn more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.