In estate planning, it’s vital to stay on top of financial changes that may influence your long-term plans. The Social Security Administration (SSA) recently announced the 2025 Cost of Living Adjustment (COLA) that affects Social Security benefits and Supplemental Security Income (SSI), which can be especially relevant for you and your beneficiaries. At Duncan Legal, PC, we’re here to help you understand how this adjustment fits into your broader estate planning strategy.
What Does the 2025 COLA Mean for You?
For 2025, the SSA has implemented a 2.5% COLA increase, providing an average monthly benefit increase of approximately $50. While more modest than recent increases—3.2% in 2024 and a notable 8.7% in 2023—this adjustment suggests that inflation may be stabilizing. For those relying on Social Security income, this COLA can play a role in maintaining purchasing power as living expenses evolve.
Additional 2025 Financial Changes Relevant to Your Estate Plan
Several other updates accompany the 2025 COLA and may impact your estate planning considerations:
- Medicare Part B Premiums
In 2025, Medicare Part B premiums will rise from $174.70 to $185.00 per month. For those on a fixed income, factoring this increase into your healthcare budgeting is important. - New Medicare Part D Out-of-Pocket Maximum
To help manage prescription drug expenses, Medicare Part D will introduce a new out-of-pocket cap of $2,000 in 2025. After reaching this threshold, Medicare will cover further costs, though deductibles and coinsurance will still apply. This change can add a level of predictability to healthcare planning and can benefit you when planning for healthcare expenses within your estate. - Increased Social Security Tax Cap
The Social Security tax cap is rising to $176,100 in 2025, up from $168,600 in 2024. This change may impact tax planning for high-income earners, influencing wealth distribution and tax strategies within your estate plan.
How These Changes Affect Your Estate Planning
Understanding these adjustments can empower you to refine your estate plan, enhancing security for both you and your loved ones. At Duncan Legal, PC, we can help you assess how these changes relate to your legacy goals and inform your financial strategy:
- Adjusting for Healthcare Costs
With increased Medicare premiums and a new out-of-pocket maximum for prescription drugs, planning for healthcare costs is more critical than ever. By accounting for these changes, we can help you protect your financial resources and ensure a more secure future. - Tax Efficiency and Wealth Distribution
The higher Social Security tax cap may have implications for wealthier individuals, especially in terms of tax obligations. Together, we can explore strategies that optimize your tax approach and strengthen your wealth transfer plans. - Investment and Income Stability
Changes in COLA can help guide investment and income planning decisions, allowing you to create a strategy that adapts to inflation while ensuring long-term stability for you and your heirs.
Secure Your Legacy with Duncan Legal, PC
The recent Social Security adjustments offer an important reminder that estate planning is dynamic and should evolve with your financial situation. At Duncan Legal, PC, we’re committed to helping you navigate these changes and integrate them seamlessly into your estate plan. Contact us today to discuss how these updates may impact your goals and ensure a legacy that supports both your immediate needs and future aspirations.
