The week before last was a big one for Social Security. The Social Security Administration (SSA) not only announced a cost-of-living adjustment (COLA), but it also gave information on some other big changes that will be made to the program in 2025.
Read more about the 2.5% COLA increase for next year and how it will effect your monthly benefits if you get Retirement, Survivors, and Disability Insurance (RSDI) or Supplemental Security Income (SSI).
Social Security officially announced the new cost of living adjustment for 2025
COLA increase for 2025 was set at 2.5%
The actual COLA for 2025 from Social Security is 2.5%, which is a lot less than the 3.2% COLA seniors got at the start of 2024. But it is important to keep that COLA in perspective. The smaller 2025 COLA is because inflation slowed down a lot in 2024.
Costs are not going up as fast as they did in the past few years, which may already be helping seniors on Social Security.
A new higher earnings test limit is to be set next year
People often think that once they start getting Social Security payments, they have to stop working. In retirement, you can work and get money at the same time.
You should think about the program’s earnings-test limits, though, if you do that before you reach full retirement age. This is the most money you can make from work before you risk having some of your Social Security check taken away.
It is called the earnings-test limit. It goes from $22,320 in 2024 to $23,400 in 2025. That is the change in the ceiling for earnings. From there, you risk having $1 taken out of your Social Security for every $2 you make.
If you are getting close to full retirement age in 2025, your earnings-test cap will go up. After that, it will go up from $59,520 to $62,160 in 2024. After that, Social Security could take $1 out of every $3 you make.
But remember that these numbers do not matter if you are still working after you hit full retirement age. They will not change the amount of your Social Security payment.
The earnings test limit will also change in 2025
Payroll taxes bring in most of the money that Social Security needs. A cap is put on the amount of income that is collected each year to pay for the program. The highest income that will be taxed by Social Security in 2025 is $176,100.
This is more than the previous high of $168,600 in 2024. Only people with higher wages will be affected by this change.
The maximum monthly benefit will be higher
Social Security taxes are capped at a certain amount per wage, so the program can only give out a certain amount each month. The most a full-age retiree will get each month in 2025 will be $4,018, up from $3,822 in 2024.
But it is possible to get a monthly paycheck that is more than the highest monthly benefit. Your monthly income will go up by 8% every year until you turn 70 if you wait to file for Social Security after you hit full retirement age.
In the past year, there has been a lot going on with Social Security. It is important to keep up with these changes whether you get benefits or not.
Beneficiaries will need to earn more working credits
If you want to get Social Security when you retire, you have to pay into the system and work for 40 work credits, or up to four credits per year. They will be worth $1,810 each in 2025, up from $1,730 each in 2024.
If you work part-time and want to get the age income someday, this number is something to think about. Even at the minimum wage, you should be able to make enough money to pay for your four classes for the year if you work full-time.
