The United States’ Social Security system has the significant advantage of being able to adapt and mold itself to the social rhythm, adjusting its budget to meet the needs of the population at any time.
Furthermore, it has the ability to increase the income derived from pension payments in accordance with increases in the price index, which is linked to rising product costs and inflation. For example, Social Security benefits can be automatically adjusted for inflation every year.
In fact, looking ahead to 2025, benefits have increased by 2.5%, which is less than in previous years, implying that inflation has not risen as much as in previous years.
This means that senior citizens who work and receive Social Security benefits will be able to earn more money without risking having a portion of their earnings withheld.
However, not all of the changes that have occurred in the US Social Security system this year apply to pensioners, and not all of them are positive. This year, the Social Security system will undergo two changes that may be financially detrimental.
Changes in the SSA that could affect the economy
The United States’ Social Security system adapts to the needs and economies of its citizens, with the goal of making decisions and changes that have a positive impact on the beneficiaries of these benefits, alleviating the economic asphyxiation caused by high prices and avoiding vulnerable situations for these groups. However, not all of the administration’s innovations benefit pensioners.
Increase in the salary cap
The majority of the Social Security system’s income comes from taxes collected on workers’ payrolls. In fact, each year, a salary cap is established to determine how much income is taxed for Social Security purposes.
The salary limit was $168,600 in 2024, but it has increased to $176,100 this year, meaning that top earners will pay Social Security taxes on an additional $7,500 in income.
However, the positive aspect of this change to Social Security is that the more income collected from payroll taxes, the better the program’s ability to avoid benefit cuts. Similarly, if a taxpayer is affected by the 2025 salary limit increase, this does not imply that they must accept a higher IRS bill.
Increase in the value of work credits
In the United States, a retirement pension can be collected even if there is no record of Social Security contributions. This is based on so-called spousal benefits, which allow you to receive the benefit after retirement.
To qualify for a Social Security pension based on your own income history, you must accumulate 40 work credits during your working life, with a maximum of four per year.
This year, however, the value of a single work credit is higher than last year, which means you may have to work a little longer to earn your four credits, delaying the legal retirement age in the United States, a measure that affects the entire population.
In terms of numbers, last year, one credit for individual work was equivalent to $1,730 in income, while this year it is $1,810. This change should only affect people who work part-time, but it could also affect citizens who are full-time parents or caregivers with few options for earning money.
