Nearly 2 million retirees and thousands of other Social Security recipients in Michigan will see an increase in their benefits starting January 2025. The Social Security Administration (SSA) has announced a 2.5% cost-of-living adjustment (COLA) for next year, providing relief to beneficiaries amid lingering financial pressures.
On average, the increase means an additional $50 per month for Social Security retirement recipients. For those relying on benefits, this adjustment is crucial for keeping up with living expenses, even as inflation begins to slow.
How Many People in Michigan Will Be Affected?
As of December 2023, Michigan had approximately 1.68 million retirees receiving Social Security benefits. In addition:
- 290,000 people received disability benefits.
- 127,000 widows, widowers, and parents depended on Social Security.
- 57,000 spouses received payments.
- 137,000 children were covered under the program.
Combined, these numbers show how significant Social Security is for Michigan residents.
When Will the New Benefits Take Effect?
The new Social Security benefits will begin in January 2025. However, for the 7.5 million Americans receiving Supplemental Security Income (SSI), increased payments will start slightly earlier—on December 31, 2024.
How Does Social Security Decide the COLA?
The annual COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure determined by the Bureau of Labor Statistics under the Department of Labor. This ensures that Social Security payments adjust with inflation, helping recipients maintain purchasing power.
Over the past decade, COLA adjustments have averaged around 2.6%:
- 2023: 8.7% (the highest in decades)
- 2024: 3.2%
- 2025: 2.5% (smaller but still helpful)
The 2025 adjustment marks the smallest increase since 2021 when the COLA was only 1.3%.
What Age Do You Qualify for Social Security Benefits?
You can begin receiving Social Security retirement benefits as early as age 62, but your benefits will be reduced if you start before reaching full retirement age. Here’s how the full retirement age varies based on your birth year:
- 1943-1954: Age 66
- 1955: 66 years, 2 months
- 1956: 66 years, 4 months
- 1957: 66 years, 6 months
- 1960 and later: Age 67
If you delay claiming benefits beyond full retirement age, up to age 70, your monthly payment will increase.
How Can You Check Your Social Security Benefits?
To keep track of your Social Security benefits, visit the SSA’s official website at www.ssa.gov/myaccount. You can create a personal account to:
- Receive text or email alerts.
- View your COLA adjustments.
- Check your estimated monthly benefits.
Will Medicare Benefits Change?
Medicare changes for 2025 will be available at www.medicare.gov. If you’re enrolled in Medicare and receiving Social Security, you’ll see your updated benefit amounts in the SSA’s Message Center.
Can You Work While Receiving Social Security?
Yes, you can work while receiving Social Security. However, there are income limits:
- In 2025, individuals reaching full retirement age can earn up to $62,160. Beyond this amount, $1 will be deducted from your benefits for every $3 earned.
- Once you reach full retirement age, there’s no limit on how much you can earn.
How Is Social Security Funded?
Social Security is funded through payroll taxes:
- Employees and employers each pay 6.2% of wages.
- Self-employed individuals pay 12.4% up to a taxable earnings limit.
For 2025, the earnings limit subject to Social Security tax will rise from $168,600 to $176,100 due to wage growth.
Does Michigan Tax Social Security Benefits?
No, Michigan does not tax Social Security benefits. However, some pensions are subject to state taxes, although a 2023 law is phasing out these taxes. At the federal level, portions of Social Security benefits may still be taxed based on your income.
Why Is the COLA Important?
The annual COLA ensures that Social Security benefits keep pace with inflation, which helps beneficiaries manage their daily expenses. While the 2025 COLA is smaller than in recent years, it still provides a financial boost for millions of Americans.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.