2025 Social Security Changes: Older Americans who were unable to support themselves financially were given a foundation by Social Security. According to a Centre on Budget and Policy Priorities analysis, this program lifts 22.7 million people out of poverty annually, including 16.5 million adults 65 and older.
1. There will soon be a larger Social Security check
- The cost-of-living adjustment which is 2.5% will be applied to Social Security benefits in 2025.
- Despite being the lowest COLA in four years, this is the fourth year in a row that COLAs have risen above the average, compared to an average increase of about 2.3% over the previous 15 years.
- In nominal dollars, the average retired worker’s monthly check will rise by $49 to $1,976 in the coming year.
- In contrast, it is anticipated that the average benefit check for survivor beneficiaries and workers with disabilities will increase by $38 per month to $1,551 and $1,580, respectively, in 2025.
2. Those with higher income might need to spread their wallets a little more.
- It’s important to note that these changes affect more than just current beneficiaries. High-earning employees may face a larger tax bill at the beginning of the 2025.
- Payroll taxes collected on earned income at a rate of 12.4% are the main source of funding for Social Security.
3. At full retirement age, the maximum monthly benefit is rise
- The full retirement age is expected to rise from $196 to $4,018 in 2025.
4. Benefit withholding thresholds for early filers are increasing.
- For employees who started receiving their Social Security benefits before they reached full retirement age, the New Year also means significant changes.
- A worker’s monthly benefit may increase by up to 8% for each year they wait to start receiving their payout, starting at age 62 and continuing until age 70. Depending on their birth year, the earliest filers at age 62 must accept a permanent 25% to 30% decrease in their monthly payout.
- For employees who will reach full retirement age in 2025, the withholding threshold is significantly different. Benefits may be withheld from this group of early filers for each $3 in earned income over $62,160 in 2025.
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5. The income thresholds for workers with disabilities are rising as well
- Early filers are not the only beneficiary group that will experience these adjustments in the upcoming year.
- They will be able to earn an additional $70 a month, or $1,620, in the New Year without their disability benefits being terminated.
- This year, blind workers with disabilities can earn $2,700 per month, an increase of $110 per month, without the need for Social Security disability benefits.
6. Eligibility for a Social Security benefit will become increasingly difficult
- Worker’s eligibility for Social Security coverage which includes potential retirement, survivor, and disability benefits will be slightly more difficult.
- Traditionally, benefits are obtained through employment to be eligible for a retired worker benefit one must accrue 40 lifetime work credits.
- For one lifetime work credit, earned income in the 2025must equal $1,810, and for a maximum of four work credits, it must equal $7,240.
