In 2025, the Social Security Administration (SSA) will implement changes to keep the program sustainable while considering inflation and increases in life expectancy. You need to know these changes if you plan to apply for retirement or disability benefits.
Below are the key changes in brief:
- An increase in the full retirement age.
- Annual Cost of Living Adjustment (COLA) calculations for inflation.
- An increased ceiling on taxable Social Security income.
These changes can affect when or how much you can expect to receive as a benefit.
How is the full retirement age changing in 2025?
The most prominent changes is the increase in full retirement age:
- As at last year, the full retirement was 66 to 67, depending on your birth year.
- Beginning this year, 2025, this range will change to between 68 and 70 years.
This change is made because of the current higher life expectancy and to make sure that social security is sustainable. If you are getting close to your retirement age, it is advisable to wait until you get to the required retirement age so you can receive a higher benefit.
Read more: Which states still tax social security benefits in 2025 – find out the full list
What is the 2025 cost of living adjustment (COLA)?
New COLA for 2025 announced by the SSA to help retirees and SSI recipients alleviate inflation burdens is pegged at 2.5% increase.
You will notice a slight change in your total monthly payment. This change may not be as much as you would expect but with the current inflation, any little addition in your income is important.
What are the new income tax requirements?
For workers, the SSA has raised the ceiling for taxable Social Security income:
- In 2024, income above $160,200 was not taxable.
- In 2025, this amount rises to $176,100.
If your income exceeds this ceiling, however, you should notice the difference on your tax return.
Read more: Social Security Calculator: How much Social Security will I get if I make $110,000 a year?
What documents do you need to apply for Social Security in 2025?
When applying for Social Security benefits, having the right documents is key. Here is what you will need:
- Proof of U.S. citizenship: A birth certificate or a U.S. passport will work.
- Age verification: Your birth certificate is the most common document, but other official records may also be accepted.
- Valid identification: Provide a government-issued ID, such as a driver’s license or state ID.
Make sure all documents are up to date to avoid delays in processing your application.
How will these changes affect you?
The updates will have various impacts depending on your situation:
- If you are nearing retirement, you would have to stay on a little longer to get your full benefits.
- Current retirees will benefit with the increase in COLA, adding a small amount to their monthly payment.
- It might reduce your take-home income as high-income earners will pay more in tax.
Continue reading:
Which states still tax social security benefits in 2025 – find out the full list
