The Social Security Administration (SSA) has announced several changes that will take effect in 2025. These updates will impact both current beneficiaries and those still working. One of the most significant changes is the Cost of Living Adjustment (COLA).
In 2025, Social Security benefits will see a 2.5% increase, translating to an average monthly boost of about $50 starting in January. However, a recent survey found that 54% of retirees believe this adjustment won’t be enough to keep up with rising costs of essentials. For those working while collecting Social Security benefits, the earnings limits before benefit reductions will also increase.
Early filers can earn up to $23,400 in 2025 before benefits are reduced, while those reaching Full Retirement Age (FRA) in 2025 can earn up to $62,160. High earners who are not yet retired will see a larger portion of their paycheck subject to Social Security taxes. The maximum taxable earnings limit will rise to $176,100 in 2025 from $168,600 in 2024.
Social Security adjustments for 2025
In addition to these changes, the maximum monthly benefit at FRA is rising to $4,018, and early filer benefit withholding thresholds are climbing. Income thresholds for workers with disabilities are also increasing.
It will also be incrementally tougher to qualify for a Social Security benefit in 2025. A cumulative 40 lifetime work credits are needed to receive a retired-worker benefit, with a maximum of four credits earned per year. In 2025, it will take $1,810 in earned income to receive one lifetime work credit.
This week, improved benefit payments are scheduled to be made to millions of Supplemental Security Income (SSI) recipients. The maximum monthly benefit available for SSI recipients is $967 for a single person and $1,450 for a couple in 2025. Mary Johnson, an independent Social Security and Medicare policy analyst, said, “The 2025 COLA will be substantial, but at the same time inflated prices persist on key essentials such as housing, meats, auto insurance, any type of service and repairs.
Despite this, a 2.5 percent COLA would be considered about average.”
The next round of benefits for those who get retirement payments is scheduled to be made on January 3. The estimated average monthly retirement benefit for Social Security claimants is expected to increase to $1,976 in 2025 from $1,907 in January 2024.