Married and divorced retirees are often entitled to spousal or divorce benefits, and a new year brings fresh changes to Social Security.

Whether you’re already collecting Social Security or plan to begin claiming in 2025, now is the time to brush up on how benefits are changing in January. From a new cost-of-living adjustment (COLA) to Medicare premium increases to an adjusted earnings test limit, here’s what all married or divorced retirees should know.

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1. A new COLA will (slightly) increase your checks

The COLA for 2025 will be 2.5%, which is the lowest adjustment since 2021. It’s also substantially lower than the COLAs in 2022 and 2023, which were 5.9% and 8.7%, respectively.

For those collecting spousal or divorce benefits, the 2.5% COLA likely won’t have a significant effect on benefits. The average spouse of a retired worker collects around $909 per month from Social Security, as of November 2024. That amounts to a raise of around $23 per month.

The silver lining of a smaller COLA is that because these adjustments are tied to inflation, smaller “raises” mean that costs aren’t increasing as quickly. In fact, the 12-month change in the Consumer Price Index was 2.7% in November 2024, according to the Bureau of Labor Statistics, compared to 9.1% in June 2022.

Slowing inflation will likely have a bigger impact on your monthly budget than the COLA, so technically, a smaller adjustment is a good thing. But for those banking on that extra money to make retirement more affordable, the 2.5% adjustment may be disappointing.

2. Medicare premiums will take a bigger bite out of your benefits

Medicare Part B premiums will also increase in 2025, which may have a disproportionate effect on those receiving smaller Social Security checks — such as those on spousal or divorce benefits.

Most people have their premiums deducted from their Social Security checks, and starting next year, you can expect to have more of your benefits withheld. Part B premiums will cost $185 per month next year, an increase of $10.30 per month.

If you’re already on a tight budget, $10.30 per month can be a significant hike. Also, when the average spousal benefit is only increasing by $23 per month as a result of the COLA, that raise will really only be around $12.70 per month for those on Medicare after accounting for the premium increase.

3. The earnings test limits are increasing

If you’re working while receiving any form of Social Security, whether it’s retirement benefits or spousal or divorce benefits, you may be subject to the retirement earnings test.

The earnings test is essentially an income limit that applies to those receiving earned income, like a salary, in addition to Social Security benefits. It only affects those under full retirement age (FRA), and there are two different limits depending on whether you’ll reach your FRA in 2025 or not.

• If you will reach your FRA in 2025: Your benefits will be reduced by $1 for every $3 over the limit of $62,160 per year. This is up from the 2024 limit of $59,520 per year.
• If you won’t reach your FRA in 2025: Your benefits will be reduced by $1 for every $2 over the limit of $23,400 per year. This is up from the 2024 limit of $22,320 per year.

Like Medicare premiums, the earnings test limits can disproportionately affect those receiving spousal or divorce benefits because these payments tend to be smaller than the average retirement benefit. If your earnings exceed the limit substantially, you could have most or even all of your benefit withheld.

The good news is that with both of the limits increasing in 2025, you can earn more before facing benefit reductions. Regardless of how much of your benefit is withheld, your payments will be recalculated at your FRA.

Spousal and divorce benefits can be a lifeline for many older adults, but it’s important to know how any changes to Social Security might affect your retirement. By keeping these updates on your radar heading into 2025, you can ensure you’re as prepared as possible.

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