Social Security recipients will see higher benefits in 2025 due to a 2.5% cost-of-living adjustment (COLA) that took effect in January. This increase raises the average monthly retirement benefit from $1,927 to $1,976. The full retirement age (FRA) is also changing.
For those born in 1959, the FRA is now 66 years and 10 months. This is part of a gradual shift towards an FRA of 67 for people born in 1960 or later. Beneficiaries who delay retirement beyond the FRA can receive higher monthly benefits up until age 70.
A major change is the repeal of the Windfall Elimination Provision (WEP) and the Government Pension Offset. These provisions had reduced benefits for millions of public sector workers.
Major Social Security benefit updates
The repeal restores full benefits to those affected and includes retroactive adjustments from 2024. The earnings cap for workers receiving Social Security benefits before reaching full retirement age has increased to $23,400. Those who earn above this amount may face temporary benefit reductions.
The maximum taxable earnings threshold has also been raised to $176,100, meaning more income will be subject to Social Security payroll taxes. Starting in 2026, eligibility for Achieving a Better Life Experience (ABLE) accounts will expand. These accounts allow people with disabilities to save and invest without losing federal benefits.
The qualifying age for disabilities will increase from 26 to 46, potentially benefiting an estimated 6 million more Americans. These changes aim to enhance the financial stability of Social Security while ensuring it meets the needs of current and future beneficiaries. As debates continue over the program’s long-term viability, further reforms may be needed to address projected funding shortfalls.
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