Multiple updates to Social Security have been implemented this year, affecting the approximately 68 million individuals receiving Social Security benefits. These modifications bring positive developments for recipients—particularly beneficial for those potentially facing financial shortages. retirement savings .
The purpose of the cost-of-living adjustment (COLA) is to ensure that Social Security benefits align with inflation, allowing recipients to preserve their ability to buy goods and services even as prices increase. The benefits have gone up by 2.5%. As of January, based on information from the Social Security Administration (SSA), which increases retirement benefits by approximately an average of roughly $50 each month .
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This rise is somewhat smaller than the previous one. present yearly inflation rate of 3% , which has continued cooling since reaching peak levels in 2022.
For instance, in 2024, the Cost of Living Adjustment (COLA) was established at 3.2%, whereas in 2023—during a time marked by high inflation—the COLA reached an impressive 8.7%. Consequently, although this year’s COLA is significantly smaller, it aligns well with a decreasing rate of inflation.
The highest possible benefit for individuals retiring at their full retirement age (FRA) has gone up as well, potentially leading to larger monthly payments. For the year 2024, this change means that retirees can expect more substantial checks. maximum benefit was $3,822. This year, the maximum benefit is $4,018 — and this would reach $5,108 for anyone who waits until they turn 70 to claim their benefits.
However, these are not the sole modifications. Below is crucial information regarding the alterations and the three key categories of individuals who will be affected.
1. U.S. citizens nearing retirement age
One major change for retirees-to-be is an extension of two months. FRA For those born in 1959, the Full Retirement Age (FRA) has gradually risen since 1983, after Congress raised it from 65 to 67.
This year, individuals reaching 66 years old must wait ten months before they can receive 100% of their benefits. Consequently, the earliest eligibility date for receiving these full benefits shifts to November 2025. However, claiming your benefits early remains an option. as early as age 62 , you’ll take a permanent decrease in the amount of your monthly check — up to about 30%.
This year we’ll also see an increase in the maximum taxable earnings limit from $168,600 in 2024 to $176,100. For higher earners, this means a bigger chunk of your paycheck will go toward Social Security taxes, though this will help fund Social Security, which is projected to be partially depleted by 2037 unless changes are made.
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2. U.S. citizens receiving disability or veterans' benefits
Individuals in America who have a disability or health issue preventing them from working might experience an increase in their Social Security Disability Insurance (SSDI) payments. This program is intended to assist those in the U.S. who cannot work primarily due to such disabilities or conditions.
As long as your income doesn't exceed the "substantial gainful activity" limit, you can continue earning money and receiving SSDI benefits. This rule is set forth by official guidelines. SSA .
By 2025, this limit had increased by $70 to $1,620 per month for the majority of recipients, whereas an individual who is legally blind and receives SSDI support can now earn up to $2,700 monthly.
Veterans will also see an increase in their VA disability compensation of 2.5%, thanks to the COLA. This increase also applies to surviving spouses of veterans receiving dependency and indemnity compensation payments.
There’s also the potential for increases in compensation rates and coverage for new presumptive conditions , which could help some veterans qualify for benefits who previously didn’t.
3. Americans who are working while collecting their benefit
For older Americans collecting their Social Security benefit while continuing to work — such as part-time or gig work to bring in a bit of extra cash — there’s a cap on how much you can earn before the SSA starts clawing back some of your benefit. This could also impact anyone who hasn’t yet reached FRA but continues to work while collecting survivor benefits.
The good news for those reaching FRA this year is that the earnings test limit Has risen to $62,160 in 2025 (previously at $59,520 last year). Beyond this limit, the SSA deducts $1 for each $3 earned. Should you be several years shy of your Full Retirement Age, they will withhold $1 for every $2 earned over $23,400 (an increase from $22,320 in 2024).
Fortunately, the earnings test limit no longer applies in the month that you reach FRA. That means no deduction, no matter how much you earn.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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