As we approach 2025, Social Security changes will impact millions of Americans, particularly married and divorced individuals who rely on spousal or divorce benefits. Understanding these changes is crucial to navigating how they will affect your benefits.
This article breaks down the key updates for married and divorced individuals, including the cost-of-living adjustment (COLA), retirement earnings test, and Medicare premiums.
Contents
Cost-of-Living Adjustment (COLA) for 2025
One of the most anticipated changes in Social Security benefits is the cost-of-living adjustment (COLA), which affects all recipients, including spousal and divorce beneficiaries.
For 2025, the COLA will be 2.5%, marking the lowest increase in four years. While this adjustment is designed to keep benefits in line with inflation, it may not feel significant, especially for those who receive spousal or divorce benefits, as these are typically smaller.
| Benefit Type | Current Monthly Benefit | 2025 COLA Increase | New Monthly Benefit |
|---|---|---|---|
| Spouse of Retired Worker | $909 | $22.73 | $931.73 |
| Divorced Spouse (eligible) | Varies | 2.5% | Varies |
As of now, the average spousal benefit is about $909 per month, and the COLA increase will add around $22.73 to this amount, making the new average benefit about $931.73 per month.
Retirement Earnings Test
If you choose to start receiving your Social Security benefits before reaching your full retirement age (FRA), you’ll need to be aware of the retirement earnings test. This test limits how much you can earn before your benefits are reduced. Here’s how it will work in 2025:
- If you reach FRA in 2025, your benefits will be reduced by $1 for every $3 you earn above $62,160 per year.
- If you don’t reach FRA in 2025, your benefits will be reduced by $1 for every $2 over the $23,400 limit.
Spousal and divorce benefits are usually smaller than the average retiree’s benefit, so these limits can have a more noticeable impact. Earnings exceeding these limits could significantly reduce or even completely withhold your Social Security benefit.
Medicare Premiums
For those receiving spousal or divorce benefits, Medicare premiums could cause a larger reduction in your Social Security payments in 2025.
Medicare Part B premiums will rise by $10.30, bringing the total to $185 per month. Since Medicare premiums are usually deducted from your Social Security benefits, this increase will have a direct impact on your check.
For example, with the COLA increase of $22.73, you may only see an additional $12.70 in your monthly benefit after Medicare deductions. This can feel like a negligible increase, especially considering the rising cost of living.
| Benefit Category | Current Monthly Premium | 2025 Premium Increase | New Monthly Premium |
|---|---|---|---|
| Medicare Part B | $174.70 | $10.30 | $185.00 |
What Does This Mean for Married and Divorced Social Security Recipients?
For married individuals and divorced individuals, these changes will impact your financial planning and budgeting:
- Smaller Increase: While you will receive a COLA increase, it may be offset by the increase in Medicare premiums, leaving you with only a small net increase in your monthly benefits.
- Earnings Limit: If you continue to work while receiving benefits before FRA, the retirement earnings test may significantly reduce your payments.
- Strategic Planning: It’s important to plan your Social Security strategy carefully, considering how these changes might affect your overall retirement income.
In 2025, Social Security changes for married and divorced people will involve modest adjustments. The 2.5% COLA increase will provide some relief, but higher Medicare premiums and retirement earnings limits could offset much of that increase.
As a result, it’s essential for spousal and divorced beneficiaries to plan accordingly and consider how these changes will affect their retirement income. Keep an eye on these changes and ensure your retirement strategy aligns with the new rules for a secure financial future.
FAQs
How much will my Social Security spousal benefit increase in 2025?
Your spousal benefit will increase by 2.5% in 2025, which is about $22.73 for the average spousal benefit of $909. However, this increase could be reduced by higher Medicare premiums.
How do the new earnings limits affect my Social Security benefits?
If you earn more than the limit, your Social Security benefits will be reduced. For those reaching FRA in 2025, the limit is $62,160, and for those not yet at FRA, the limit is $23,400.
Will the increase in Medicare premiums affect my Social Security benefits?
Yes, the Medicare Part B premiums will rise by $10.30, which means your net increase in Social Security benefits may be smaller than expected, especially if you receive smaller spousal or divorce benefits.
