These are all very important things to know.
Oct. 10 was a big day for Social Security. Not only did the Social Security Administration (SSA) announce a cost-of-living adjustment (COLA), but it also shared details on a few other key changes that are coming to the program in 2025. Here’s a rundown.
1. A 2.5% COLA
Social Security’s official 2025 COLA is 2.5%, which is quite a bit lower than the 3.2% COLA seniors received at the start of 2024. However, it’s important to give that COLA some context.
The reason 2025’s COLA is lower is because inflation slowed down considerably in 2024. Seniors on Social Security may already be getting some relief because prices aren’t rising at the same rapid pace they did in recent years.
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2. A higher earnings-test limit
It’s a big myth that once you start receiving benefits from Social Security, you have to stop earning a paycheck. You’re allowed to work and collect Social Security simultaneously. But if you do so before reaching full retirement age, you’ll have to be mindful of the program’s earnings-test limits.
The earnings-test limit tells you how much job-related income you can bring home before you risk having some of your Social Security paycheck withheld. In 2025, the earnings-test limit will be $23,400 — an increase from $22,320 in 2024. From there, you’ll risk having $1 in Social Security withheld per $2 of earnings.
If you’ll be reaching full retirement age at some point in 2025, your earnings-test limit will be higher. In that case, it will be $62,160, up from $59,520 in 2024. From there, you’ll risk having $1 in Social Security withheld per $3 of earnings.
But remember, if you’ve already reached full retirement age and are continuing to work, you don’t have to pay attention to these numbers. They won’t impact the amount of money Social Security pays you.
3. A higher wage cap
Social Security’s primary revenue source is payroll taxes. Each year, there’s a cap put in place that determines how much earnings are taxed to fund the program.
In 2025, the wage cap for Social Security taxes is $176,100, up from $168,600 in 2024. This change only affects higher earners.
4. A higher requirement to earn work credits
To collect Social Security in retirement, you need to pay into the program and accumulate 40 work credits in your lifetime at a maximum of four credits per year. In 2025, the value of a single work credit will be $1,810, up from $1,730 in 2024.
This is a number to pay attention to if you work part-time and are hoping to qualify for Social Security down the line. If you work full-time, this change probably won’t impact you because, even at a minimum wage, you should be earning enough to secure your four credits for the year.
5. A higher maximum monthly benefit
Because there’s a wage cap for Social Security taxes, there’s also a maximum monthly benefit the program will pay out. In 2025, that maximum monthly benefit at full retirement age will be $4,018, up from $3,822 in 2024.
However, it’s possible to score a monthly payday beyond the maximum monthly benefit. If you delay your Social Security claim past full retirement age, your monthly benefit will rise by 8% for each year you do, up until age 70.
Clearly, there’s a lot happening with Social Security in the new year. It’s important to stay informed of these changes — whether you’re collecting benefits or not.
