2025 Savings Boost: Key Updates for Social Security and Retirement

November 25, 2024

It is shocking to think 2025 is right around the corner. As we enter the final month of the year and complete our holiday shopping, it is tough to ignore the effects inflation has had on us as consumers. However, inflation does play a role in our lives as savers by adjusting the amount we can put away and receive in retirement. Let’s look at changes coming in 2025 for social security, health savings accounts, and retirement accounts.

Social Security Cost of Living Adjustment (COLA)

The Social Security cost of living adjustment (COLA) is an annual change in the amount of benefits received based on levels of inflation. The reason for it is to help social security recipients keep up with the rising costs of goods and services. For 2024, the COLA was 3.2% as inflation declined from a 40 year high. Inflation continued to slow this year, resulting in a COLA of 2.5% for 2025. This means social security recipients will see their benefit grow by $2.50 for every $100 they currently receive starting in January. 

Health Savings Account Contribution Limit

Individuals using a high deductible health plan with a health savings account (HSA) can contribute up to $4,300 in 2025. For those with family coverage, the limit will be $8,550. These HSA limits are up from $4,150 and $8,300, respectively. The catch-up contribution limit will remain unchanged at $1,000 for those 55 and older.

As a reminder, HSA’s are a great tool for building wealth. They are triple-tax free, which means you can make tax-free contributions, grow tax-deferred earnings, and make tax-free withdrawals for qualified health care expenses. If you are interested in setting up a new HSA, contact us today to get started.  

401(k) Maximum Contribution Limit

The amount individuals can contribute to their 401(k) plans in 2025 will increase to $23,500, up from $23,000 this year. The catch-up contribution limit for those aged 50 and over will remain at $7,500. This results in a maximum contribution for those 50 and older of $31,000. Also starting in 2025, employees reaching age 60-63 in the calendar year will qualify for a higher catch-up contribution limit of $11,250 instead of $7,500. 

Individual Retirement Account (IRA) Contribution Limit

The maximum annual IRA contribution will remain at $7,000 with a catch-up contribution limit of $1,000 for 2025.

All these changes give people the opportunity to save more for retirement. While the maximum contribution limits may not affect everyone, it is important to think about increasing your own contribution yearly. Small increases can make a significant long-term 

difference with the power of compounding. If you would like to review your future goals or how any changes may affect your portfolio, reach out to an Advisor today.  

We, at Security National Bank, continue to be grateful to our customers, both existing and new, and the relationships we form with you along your financial journey. During this upcoming holiday season, we hope you can take time to spend with those important to you. Happy Thanksgiving, from our SNB family to yours.