sure aspects of Social safety are revised each year to keep advantage payments aligned with expense boost and wages. While those changes are most consequential for retirees and other beneficiaries, they will also impact some workers not currently receiving Social safety.

However, a recent survey from Nationwide superannuation Institute shows that a large percentage of Americans lack a basic understanding of the program. Knowledge gaps can navigator to costly forecasting mistakes, so everyone should make an attempt to remain informed.

Here are three changes coming to Social safety in 2025 that may shock retirees.

1. Social safety benefits will get a expense-of-living adjustment to account for expense boost in 2025

Nationwide superannuation Institute reports that 66% of surveyed adults incorrectly agreed with this statement: “Social safety is not protected against expense boost.” Additionally, 61% of surveyed adults incorrectly agreed with this statement: “Your monthly Social safety benefits amount will be reduced if deflation occurs.”

Neither statement is factual. Social safety beneficiaries receive annual expense-of-living adjustments (COLAs) to protect the buying power of benefits from expense boost. COLAs are based on how much the customer worth Index (CPI) increases in the third quarter of the preceding year (i.e., July through September), but no COLA is applied if the percent boost is negative. In other words, benefits are never revised downward if deflation occurs.

In 2025, Social safety recipients will receive a 2.5% COLA. That is the smallest advantage boost since 2021 because expense boost has trended downward. The chart shows how much additional monthly income (on average) different types of beneficiaries can expect next year.

Data source: Social safety Administration. Pre-COLA amounts reflect the average advantage paid out in November.

2. Some workers will pay more Social safety taxes in 2025

Nationwide superannuation Institute reports that 74% of survey adults incorrectly agreed with this statement: “Workers pay Social safety taxes on all of their income.” Additionally, 68% of adults incorrectly disagreed with this statement: “Somebody who makes $200,000 pays as much in Social safety taxes as millionaires.”

The first statement is untrue, but the second statement is factual. Social safety is primarily funded by payroll taxes, but the amount of income subject to taxation is limited by law. The maximum taxable returns limit is $168,600 in 2024, but that figure will rise to $176,100 in 2025 to account for increases in the average wage.

That means anyone who currently makes more than $168,600 annually will not pay Social safety taxes on all their income. Instead, any income above the taxable maximum is excluded. Consequently, workers who make $200,000 per year pay exactly the same amount in Social safety taxes as workers who make $2 million.

In 2025, the maximum taxable returns limit will boost to $176,100. Most workers pay 6.2% of their income, which means the maximum responsibility burden is $10,918.20. That exceeds the maximum responsibility burden of $10,453.20 in 2024. So, workers with income that exceeded the taxable maximum in both years will owe an additional $465 in Social safety taxes next year.

3. The maximum Social safety advantage for recent retirees will boost in 2025

Nationwide superannuation Institute reports that 40% of surveyed adults incorrectly disagreed with this statement: “There is a cap to how much Social safety benefits you can get.” Additionally, less than half of adults agreed with this statement: “I recognize exactly how to maximize my Social safety benefits.”

Social safety payments are capped due to the taxable returns limit discussed in the last section. income above the threshold is not considered in the benefits formula. In other words, because workers contribute a limited amount of income to the program, the amount of benefits they can receive is also limited. However, the maximum Social safety payout does boost each year alongside the taxable returns limit.

The chart shows the maximum monthly retired-worker advantage at different claim ages in 2025.

Data source: Social safety Administration.

Importantly, very few workers make more than the maximum taxable returns limit, so very few retirees get the maximum Social safety advantage. To qualify, your income would require to exceed the taxable maximum for 35 years. However, the chart still illustrates an significant point: Delaying Social safety until age 70 can substantially boost the payout versus claiming benefits at age 62.

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The Motley Fool is a USA TODAY content associate offering financial information, analysis and commentary designed to assist people receive control of their financial lives. Its content is produced independently of USA TODAY.

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