Social Security Changes in 2025: What Retirees Need to Know About Paycheck Impact

Good times and struggles in life exist that could very well set our course. While change is inherent in daily living, some might find it more difficult than others. Social Security, the federal agency issuing millions of payments to beneficiaries from the various benefit programs of retirement, survivor, disability, and SSI, changes with everyone else’s life.

Long story short, not all change is bad; change may benefit Social Security next year. If you currently are eligible for retirement benefits, read more about the upcoming 2025 changes and how they would affect retiree wages.

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Usually getting an annual cost-of-living adjustment, or COLA, Social Security payments are a way to help retiree incomes from getting too expensive with rising prices over the passage of time. There is no guarantee, however, of a COLA in any one year. One needs inflation from one year to the next if one is to happen.

Fortunately for most of 2022, it was defined by somewhat strong inflation. Up until now, however, living expenses annually have remained at hold in 2024. Social Security benefits will, therefore, most likely increase in the 2025 year also.

Though the COLA for every January is calculated using the inflation data from the previous third quarter, the exact amount of that raise is yet undetermined.

The nonpartisan Senior Citizens League had estimated the 2025 Social Security COLA would be 2.57%. That’s nonetheless a boost though that is less than the 3.2 percent increase recipients had at the start of 2024.

Maximum Benefit

Higher salaries benefit the program only for each dollar an employee earns below a pay tax threshold, which increases each year; not every worker pays Social Security taxes on every dollar that they earn. On the other side of that coin, there is a maximum monthly benefit payment from Social Security.

For someone filing at full retirement age, that’s $3,822 per month in 2024; for those delaying, it’s $4,873 per month.
Worth noting, the maximum monthly payment may only be eligible to those beneficiaries who meet the full retirement age, work history, and Social Security contribution requirements. For the retired workers to be awarded the $4,873 refund, they also had to pay contribution amounts on their maximum earnings subject to taxation.

Apart from these highest monthly payments, retirees qualify to get $1,900 on average and $2,710 should they claim benefits before attaining a full retirement age.

Limit of Earnings Test

Fact is, you can work and still collect Social Security. It is possible. However, if you are working while getting benefits and are below full retirement age, having an income greater than what is considered the earnings-test limit, you will have some of your benefits withheld.

This year’s earnings limit to the maximum is $22,320, or $59,520 if you have not reached your full retirement age but will do so by the end of the calendar year.

These limitations will probably go up next year, so you might be able to make a little more in income next year before you have to start worrying about Social Security withholding. Just so you know, though, you don’t actually lose the amount of your benefits that are withheld just because you exceeded the earnings-test threshold.

This money will be returned to your monthly checks when you are old enough to retire. Remember, too, that change can be good or bad depending on the circumstances.