Annual changes to Social Security impact more than 68 million beneficiaries and over 184 million workers who pay into the system. These changes incorporate annual inflation, wage trends, and legislative amendments. Although cost-of-living adjustment (COLA) often takes center stage, several other changes will soon become effective in 2025. Here is a summary of the most important changes.
Adjustments to benefits and taxes
Cost-of-Living Adjustment (COLA)
COLA for the year 2025 will rise by 2.5%, and such change relates to the trend of inflation having been cooler than previously. The average retirement benefit would have increased to $1,976 per month from $1,927, showing a difference of $49. Other Social Security payments, such as survivor benefits, family benefits, and disability benefits, as well as Supplemental Security Income (SSI) payments, will receive these same changes.
Social Security Checks – January 2025 Payment Schedule Dates Update
Compared with other years, this COLA for 2025 has been the lowest in four years of experience. It’s even greater than the pre-pandemic level. According to previous records of the COLA, increases included the 5.9% hike the 2022 COLA experienced and 8.7% that was in 2023 as results of pandemic-induced inflation. The Social Security Administration (SSA) estimates that SSI beneficiaries will receive their first COLA-adjusted payment on December 31, 2024.
Medicare premiums
Come January of the year 2025, the costs pertaining to Part B of the Medicare health insurance program shall increase from $174.70 to $185 on a monthly basis. Most beneficiaries will see an offset of the increase against their respective cost of living adjustment as the premiums paid for Medicare are usually withheld from Social Security payments.
Social Security to change retirement age in 2025
Social security taxes
In 2025, the wage base subject to Social Security taxes would increase to $176,100 from $168,600 current in 2024. Workers and employers will continue to each pay 6.2% of earnings, with self-employed individuals covering the full 12.4%. Income above that threshold remains untaxed for purposes of Social Security.
Service, eligibility, and retirement age updates
Mandatory office appointments
Starting on January 6, 2025, making an appointment to see someone in a Social Security office will be the requirement. This is part of an SSA efficiency effort to have less waiting time. Some exceptions are made for vulnerable populations and military personnel in urgent cases, though. Appointment schedules may be made through the SSA’s national hotline or local offices.
Full retirement age (FRA)
The full retirement age of 66 years and 10 months in 2025 will also be reached by persons born between May 2, 1958, and February 28, 1959. The gradual increase of the FRA continues and will gradually settle at the age of 67 for those born in 1960 or beyond.
Early retirement benefits under the Security program will start at the age of 62, but their amounts will be permanently reduced by around 30%. On the other hand, for those who postponed benefits beyond their full retirement age, the benefits will increase by 8 percent each year up to the maximum possible amount at age 70.
Earnings test thresholds
When continuing to work before attaining full retirement age (FRA), beneficiaries have their earnings tested. If their income is above certain amounts, benefits are withheld for a limited time. For 2025, that amount is $23,400 versus $22,320 in 2024. Any amounts over that will have $1 withheld for every $2 earned over that amount.
Then there are relaxed rules for the very year a beneficiary reaches the FRA. And now the cut-off number rests at $62,160, with the amount of $1 withheld for every $3 earned. After reaching the FRA, that test is done away with, and those withheld benefits are rolled into the benefits at some future date.
Qualifying for benefits
A person must earn 40 credits, or the equivalent of about 10 years of work, to be entitled to Social Security retirement benefits. In 2025, one credit will be worth $1,810 in income, rising from a value of $1,730 in 2024. Workers may generate up to four credits in a single calendar year through earning, ringing to the limit that year of $7,240.
Disability income limits
Except for some very specific monetary limits on earning, the Social Security System allows people on SSDI to work some while receiving benefits. For most beneficiaries, the threshold will increase by $70 from 2024 to $1,620 as of 2025. In contrast, blind beneficiaries on SSDI will enjoy a higher monthly limit of $2,700, increased by $110.
Preparing for the changes
These updates also reflect the changing nature of Social Security—the ebb and flow of dynamism through time, economic conditions, and legislative changes. Beneficiaries and contributors should have a grasp of the changes to make informed choices about their retirement, earnings, and eligibility.
