As we head into 2025, there are a slew of Social Security changes set to take effect in January. Many of these changes will have a direct impact on your benefit amount, potentially affecting your checks by hundreds of dollars per month. Here are three ways you might collect larger checks in the new year.

1. The new COLA will take effect — with a major silver lining

Retirees can expect to receive a 2.5% cost-of-living adjustment (COLA) in 2025. The average retiree collects around $1,925 per month, according to the most recent data from the Social Security Administration, so that amounts to a raise of around $48 per month.

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However, it’s not just people on retirement benefits who will receive the bonus. Older adults collecting spousal benefits, disability benefits, or survivors benefits will also earn the 2.5% COLA beginning in January.

Next year’s COLA will be the smallest in several years, but the silver lining is that it means inflation is also slowing. The COLA is tied directly to shifts in the Consumer Price Index. While a smaller raise may feel like a disappointment, the good news is that everyday expenses are slowly becoming more affordable — which can help you keep more of your benefits in retirement.

2. The maximum benefit is at a record high

In 2024, the maximum Social Security benefit is $4,873 per month. Starting in January, though, the most you’ll be able to collect in benefits is $5,108 per month — the highest payment on record.

To achieve the max payments, there are three requirements you’ll need to meet: work for at least 35 years, delay benefits until age 70, and consistently reach the maximum taxable earnings limit (which is the highest income subject to Social Security tax). In 2025, that limit will be $176,100 per year.

If you’re already retired and taking benefits, this change likely won’t affect you. But if you’re planning on retiring in 2025 or beyond, you could potentially earn a higher benefit than in 2024.

3. Those working in retirement may keep more of their benefits

You can continue working either part-time or full-time after taking Social Security, but if you’re younger than your full retirement age (FRA) — which is age 67 for everyone born in 1960 or later — you may have a portion of your benefits withheld.

Your earned income will be subject to the retirement earnings test, and there are two different limits, depending on whether you’re well under your FRA or will reach your FRA in 2025:

• If you’ll be under your FRA in 2025: Your benefits will be reduced by $1 for every $2 over the limit of $23,400 per year.
• If you’ll reach your FRA in 2025: Your benefits will be reduced by $1 for every $3 over the limit of $62,160 per year. Only the income you earn in the months leading up to your FRA will count toward the limit.

Both of these limits will be slightly higher in 2025, compared to 2024. The smaller limit will be increasing by $1,080 per year, while the larger limit will increase by $2,640 per year. This means that you can earn more before facing benefit reductions.

It’s important to note that these withholdings are only temporary and your benefit amount will be recalculated at your FRA. But in the short term, higher earnings limits can help you keep more of your benefits if you continue to work in retirement.

A new year means a revamped Social Security program. While many of these adjustments are relatively small, they can have a major impact on your monthly benefit. By keeping an eye out for these changes heading into 2025, you can prepare your budget accordingly.

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