Retirees will see a rise in their Social Security checks starting next January. As 2025 approaches, it’s important for beneficiaries to stay informed about these significant changes before the New Year arrives. Regardless of your current status—be it retirement, employment, or disability benefits—these alterations will affect your finances.
A modest 2.5% increase: Beneficial yet limited
In 2025, there will be a 2.5% increase in Social Security benefits due to a Cost-of-Living Adjustment (COLA). This adjustment is informed by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter, a period marked by a notable decrease in inflation. The average monthly payment for retired workers is set to increase from $1,927 to $1,976, while couples receiving benefits together will see their monthly total rise from $3,014 to $3,089.
Although the rise is an improvement, it doesn’t significantly alter the situation for individuals facing escalating expenses in sectors such as housing and healthcare. While it may seem like a small improvement rather than a definitive answer to rising prices, it suggests that inflation could be easing, paving the way for brighter days ahead.
Increased Earnings Thresholds
The maximum earnings subject to Social Security taxes is set to rise for individuals who continue to work and contribute payroll taxes. Starting in 2025, the threshold increases to $176,100, rising from $168,600 in 2024. This indicates that those with higher incomes will contribute more to the system, but it also suggests that increased contributions now could result in greater benefits upon retirement.
Retirees in the workforce find increased flexibility
It is possible to work while receiving Social Security benefits; however, if you have not yet reached full retirement age, a portion of your benefits may be deducted. On a positive note, there are encouraging developments in 2025, as the earnings limits are increasing. Individuals who have not yet reached full retirement age can now earn an annual income of up to $23,400, which breaks down to $1,950 each month, without experiencing any reduction in benefits.
This represents an increase from $22,320. When you attain your full retirement age, the annual limit rises to $62,160 ($5,180 per month), an increase from the previous $59,520. Upon reaching full retirement age, any benefits that were previously withheld due to earnings will be recalibrated and included in your payout.
Beneficiaries Experience Modest Growth
Recipients of Social Security Disability Insurance (SSDI) can expect to see a rise in the monthly earnings limits. Beneficiaries who are not blind can now earn a maximum of $1,620 monthly, an increase from the previous $1,550. The threshold for blind beneficiaries increases from $2,590 to $2,700. The threshold for the Trial Work Period, enabling individuals to explore job opportunities while retaining their benefits, is set to rise to $1,160 monthly.
Supplemental Security Income Disbursements Receive an Uplift
Recipients of Supplemental Security Income will see a boost in their benefits. Individuals will experience a rise in monthly payments from $943 to $967, and couples will see their payments increase from $1,415 to $1,450.
Increased Maximum Benefits for Workers at Full Retirement Age
Individuals set to retire at full retirement age in 2025 can look forward to an increased maximum monthly benefit. The updated threshold will now stand at $4,018, an increase from the previous $3,822 in 2024. The increased payout is designed to benefit those who have consistently earned high wages and have chosen to claim their benefits at full retirement age.
However, there is an opportunity for even greater earnings by delaying retirement until age 70. For instance, if one waits until 2024 to retire at age 70, the maximum benefit would be $4,873, which would increase to $5,108 in 2025.
Students Experience Minor Changes, Resource Restrictions Remain Unchanged
Students who receive SSI will see a modest increase in exclusion limits. Monthly exclusions are set to increase to $2,350, a rise from the previous $2,290, while the annual limit will also see an uptick to $9,460, up from $9,230. Despite the ongoing discussions, the resource limits for SSI—$2,000 for individuals and $3,000 for couples—will remain unchanged, leading to renewed demands for adjustments to these thresholds.