The Super Catch-up and Other Changes in 2025
Changes for 2025
A new year brings new changes in retirement planning. We wanted to take a moment to discuss some of the important changes impacting contribution limits, Social Security payments, Medicare premiums, and more.
1) Social Security Payments
Social Security recipients will see their monthly payments increase by 2.5% which reflects the Cost-of-Living Adjustment (COLA) for 2025. This is down from the 3.2% increase in 2024 as it reflects a lower recorded inflation rate increase in 2024.
2) Medicare Costs
Standard premiums for Medicare Part B will be increasing to $185.00. This is a $10.30 increase from 2024. For many these premiums are deducted from Social Security payments so this will be reflected in their monthly payment.
3) IRA Contributions
Limits for 2025 contributions into an Individual Retirement Account will stay at $7,000. For individuals aged 50 or older there is an additional $1,000 catch-up contribution so the total contribution limit for those aged 50 or older is $8,000.
4) 401(k) Contributions
Contribution limits into 401(k) and 403(b) plans will increase to $23,500 per individual in 2025. Those aged 50 or older can contribute an additional $7,500 which brings the total contribution limit for those aged 50 or older to $31,000.
2025 will offer unique super catchup savings options available for individuals 60-63. Individuals in that age range may be eligible for a super catchup contribution of $11,250 which would allow them to save up to $34,750 into a retirement plan. It is important to check with your 401k plan to see if they offer this option.
5) Standard Deduction
Most taxpayers take the standard deduction when filing their taxes. For 2024 tax returns filed by April 15, 2025, the standard deduction for married couples will be $29,200. The standard deduction for individual taxpayers will be $14,600.
For those aged 65, they will receive a higher standard deduction. For a married couple, the deduction will increase by $1,550 for each qualifying individual for a potential deduction of $30,750 if both individuals qualify. For an individual filer, the standard deduction will increase by $1,950 for a total of $16,550.
6) Social Security Earnings
If you claim Social Security prior to reaching full retirement age there is an income limit you are able to earn before your benefit begins to be negatively impacted. In 2025, that limit will be $23,400. Any earnings above that amount may result in a reduced Social Security benefit.
Conclusion
2025 brings new changes to retirement planning and with those changes come opportunities to put yourself in a better position for the future. The first step is to understand the changes being made. The next step is to see how you can apply these changes to your own personal situation. If you want help with that last part, please feel free to reach out to me.