The Social Security Administration (SSA) just announced some big changes for the program in 2025 affecting tens of millions of retirees who receive monthly checks.

Social Security benefits make up a sizable portion of gross income for many retirees. That’s why it’s important for recipients to stay up-to-date on changes to the program that could affect how much benefits they receive, and how those benefits are taxed or calculated, among other factors. Here’s what all retirees should know about Social Security in 2025.

Benefits are going up

The one bit of good news is that Social Security benefits will increase. After the release of September inflation data, the SSA announced a cost-of-living adjustment (COLA) of 2.5%. That means the average monthly Social Security check for retirees will increase from $1,920.48 (as of August) to roughly $1,968.50, or $23,622 annually.

The COLA is made annually to help retirees keep pace with inflation. The 2025 increase is the smallest in four years because inflation has slowed this year after several years of extremely high inflation.

It’s disappointing to see the COLA fall from recent years, even though 2.5% is the average adjustment since 2000, because it’s been well documented by the nonpartisan Senior Citizens League that benefits have lost purchasing power over the years anyway.

The full retirement age is going up for some

Age is a big factor with Social Security: You can begin claiming benefits as early as 62. But the earlier you take benefits, the more they are reduced (and the longer you wait — but only up until 70 — the more they are increased). That’s why most retirees wait until their full retirement age (FRA) when they can claim the primary insurance amount that they are entitled to.

Retirees born in 1957 or 1958 could reach their FRA this year at 66 and 6 months or 66 and 8 months. But in 2025, the FRA is increasing — retirees born in 1958 or 1959 won’t reach their FRA until the age of 66 and 8 months or 66 and 10 months, which means waiting a little longer to claim benefits at their FRA.

Data: Social Security Administration.

A higher threshold for Social Security taxes

The majority of the Social Security program is funded by taxes on personal income. However, the SSA only levies its income tax up to a certain threshold that is based on national wage growth. The threshold this year is $168,600. Next year, it is expected to rise to $176,100, a nearly 4.5% increase. That’s smaller than last year’s 5.2% increase.

New income thresholds for withholding benefits

Retirees who claim benefits early but still work see a portion of their benefits withheld until they reach their full retirement age. The amount withheld is based on an earnings test — there’s a lower limit for retirees who will not reach their FRA in the current year and a higher limit for those who will reach that milestone in the current year (although withheld benefits are recovered after reaching FRA).

And those earnings limits are going up in 2025. For example, if you don’t reach your FRA in 2025, the SSA will withhold $1 in benefits for every $2 in earnings above $23,400 — a limit that’s up 4.8% from 2024.

If you do reach your FRA in 2025, the SSA will withhold $1 in benefits for every $3 in earnings above $62,100 — a limit 4.3% higher than in 2024.

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