2025 will bring some significant changes to Social Security that beneficiaries should be aware of before the New Year arrives. Whether you are retired, still working, or receiving disability benefits, these changes will affect your finances, so knowing about them ahead of time will help you better prepare and make ends meet.
A 2.5% COLA Adjustment: Small but Helpful
In 2025, Social Security benefits will receive a 2.5% cost-of-living adjustment (COLA). This change is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year, when inflation was significantly lower.
This means that the average monthly payment for retired workers will rise from $1,927 to $1,976, while the monthly total for couples receiving benefits will increase from $3,014 to $3,089.
While the increase is better than nothing, it is not particularly significant for those facing rising costs in areas such as housing and healthcare. It may appear to be a minor boost rather than a solution to inflationary pressures, but it does indicate that inflation is likely to be cooling and that better times are ahead.
Higher Earnings Limits: Bigger Contributions, Bigger Future Benefits
For those who continue to work and pay payroll taxes, the maximum earnings subject to Social Security taxes is increasing. In 2025, the limit rises to $176,100 from $168,600 in 2024. This means that high-income earners will pay more into the system, but it also means that contributing more now may result in a larger benefit when you retire.
Working Retirees Get More Wiggle Room
You can work and receive Social Security, but if you are under the full retirement age, some of your benefits will be withheld.
Having said that, there is good news for 2025: the earnings limits are increasing. If you are under the full retirement age, you can now earn up to $23,400 per year ($1,950 per month) without losing benefits.
This is up from $22,320. When you reach full retirement age, the annual limit rises to $62,160 ($5,180 monthly), up from $59,520. When you reach full retirement age, any benefits withheld due to earnings are recalculated into your payout.
SSDI Beneficiaries See Slight Increases
The monthly earnings thresholds for Social Security Disability Insurance (SSDI) recipients will be increased. Non-blind beneficiaries can earn up to $1,620 per month, an increase from $1,550. For blind beneficiaries, the limit increases from $2,590 to $2,700.
The Trial Work Period threshold, which allows workers to try out jobs while still receiving benefits, is also rising to $1,160 per month.
SSI Payments Get a Boost
SSI recipients will also see an increase in benefits. Individual monthly payments will rise from $943 to $967, while couples’ payments will increase from $1,415 to $1,450.
Higher Maximum Benefits for Full-Retirement Workers
Those planning to retire at full retirement age in 2025 will receive a higher maximum monthly benefit. The new limit will be $4,018, an increase from $3,822 in 2024.
This higher payout rewards workers who have consistently earned high wages and waited until full retirement age to claim benefits, but some workers can earn even more by waiting until age 70.
For example, if you retire at age 70 in 2024, your maximum benefit will be $4,873, rising to $5,108 in 2025.
Students Get Slight Adjustments, Resource Limits Stay Put
Exclusion limits for students receiving SSI are slightly increasing. Monthly exclusions will increase to $2,350 (up from $2,290), with an annual limit of $9,460 (up from $9,230). However, the SSI resource limits of $2,000 for individuals and $3,000 for couples remain unchanged, prompting calls to update these thresholds.
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